Report  of  Conference 

Held  in  Washington,  D.  C. 
on  May  22,  23,  1919 

between  the 

United  States  Shipping  Board 
Emergency  Fleet  Corporation 

and 

Representatives  of  Shipowners 

Manufacturers,  Bankers,  and 

Farmers  Associations 


WASHINGTON 
GOVERNMENT  PRINTING  OFFICE 

1919 


CONFERENCE  BETWEEN  U.  S.  SHIPPING  BOARD  EMERGENCY 
FLEET  CORPORATION  AND  REPRESENTATIVES  OF  SHIP- 
OWNERS, MANUFACTURERS,  BANKERS' AND  FARMERS'  ASSO- 
CIATIONS.   

May  22,  1919 :  Morning  session  convened  at  10.30  a.  m.,  adjourned 
at  1  p.  m. ;  afternoon  session  convened  at  2.30  p.  m.,  adjourned  at 
5.40  p.  m. 

May  23,  1919:  Morning  session  convened  at  10.30  a.  m.,  adjourned 
at  1  p.  m.:  afternoon  session  convened  at  2.30  p.  m.,  adjourned  at 
4.45  p.  m. 

Present:  Eepresenting  the  United  States  Shipping  Board  Emer- 
gency Fleet  Corporation : 

Edward  N.  Hurley,  president;  Raymond  B.  Stevens,  vice  president,  John  A. 
Donald,  vice  president;  John  H.  Rosseter,  director  of  operations,  trustees. 
Ira  A.  Campbell,  admiralty  counsel ;  John  H.  Griffin,  assistant  admiralty 
counsel;  James  V.  Converse,  assistant  secretary;  J.  E.  Barber;  Donald  Scott: 
William  C.  Ward. 

Present:  Eepresenting  shipowners,  manufacturers,  bankers  and 
farmers  associations ;  etc. : 

Albrecht,  Emil  P.,  president,  Philadelphia  Bourse. 

Alexander,  Hon.  J.  W.,  Congressman  from  Mo.,  Committee  on  Merchant  Marine. 

Allen,  William,  secretary,  National  Merchant  Marine  Association,  Munsey 
Building,  Washington,  D.  C. 

Atkeson,  Thos.  C..  representing  National  Grange,  Patrons  of  Husbandry,  303 
Seventh  Street,  Washington,  D.  C. 

Baer,  Hon.,  Congressman,  North  Dakota. 

Baldwin,  George  J.,  National  Marine  Association,  New  York. 

Barnes,  J.  E.,  Atlantic  Coast  Steamboat  Association,  Baltimore,  Mel: 

Bennet,  Claude  N.,  Congressional  News  Bureau,  Washington,  D.  C. 

Benson,  W.  D.,  representing  Puget  Sound  Managers  and  Operators  Associa- 
tion, Seattle,  Wash. 

Billings,  Harry,  special  representative,  Pennsylvania  Railroad  System,  Phila- 
delphia, Pa. 

Bowen,  R.  D.,  Paris,  Tex.,  director,  representing  Agriculture,  Mississippi  Val- 
ley Association,  and  vice  chairman  Marketing  Traffic  Committee  Associa- 
tion State  Farmers  Union  Presidents. 

Bogart,  E.  L.,  University  of  Illinois. 

Bowen,  Mr.  American  Exporters  and  Importers  Association,  New  York. 

Burling,  Edw.  B.,  National  Mercantile  Marine  Association,  Washington,  D.  C. 

Cantelow,  H.  C.,  Puget  Sound  Shipowners  and  Managers  Association,  Seattle, 
Wash. 

Carroll,  J.  B.,  Atlantic  Coast  Shipbuilders  Association,  Washington,  D.  C. 

Coleman,  H.  A.,  Congressional  Information  Committee,  Washington,  D.  C. 

Collins,  W.  F.,  secretary,  Committee  on  Commerce  and  Marine  American  Bankers 
Association,  New  York  City. 

Condon,  E.  J.,  Chicago,  111.  (engineer). 

Crowley,  Capt.  J.  G.,  Coastwise  Transportation  Co.,  also  Boston  Chamber  of 
Commerce. 

Donalan,  American  Federation  of  Labor,  Washington,  D.  C. 

Douglas,  W.  H.,  American  Exporters  and  Importers  Association,  New  York 
City. 

Duff,  E.  H.,  American  Steamship  Association,  New  York  City. 

(3) 


736056 


4 

Dn tilth-Smith,  E.,  American  Exporters  and  Importers  Association,  New  York 

Evans,  A.  H.,  American  International  Shipbuilding  Corporation,  Hog  Island,  Pa. 

Evans,  H.  A.,  Atlantic  Coast  Shipbuilding  Association.  Baltimore,  Md. 

Feiser,  M.  L.,  Marine  Review,  New  York  City. 

Fitzgerald,  Congressman,  Washington,  D.  C. 

Fletcher,  Duncan  U.,  Senator,  Washington,  D.  C. 

Flinn,  Mr.,  Mobile,  Ala. 

Follansbee,  A.  W.,  jr.,  San  Francisco. 

Ford,  'Sherman,  the  Texas  Co.,  Munsey  Building,  Washington,  D.  C. 

Franklin,  P.  A.  S.,  American  Steamship  Association,  New  York  City. 

•Gallagher,  Hugh,  Pacific  Shipowners  Association,  Seattle,  Wash. 

-Goodsell,  E.  L.,  representing  State  Market  Commission  of  California  and  Island 
Growers  of  West  Indies. 

'Green,  Lincoln,  vice  president,  Southern  Railway,  Washington,  D.  C. 

•Gregory,  C.  F.,  American  International  Harvester  Corporation,  Chicago,  111. 

Gustafson,  C.  H.,  Farmers  Union,  Nebraska. 

Hamilton,  George  G.,  representing  Farmers  National  Council. 

Hamilton,  Jolm  L.,  American  Bankers  Association,  Columbus,  Ohio. 
Hampton,  Mr.,  managing  director,  Farmers  National  Headquarters. 
Hart,  T.  J.,  attorney,  Washington,  D.  C. 
Hartshorn,  Mr.,  San  Francisco,  Calif. 

Hannepin,  John  S.,  Columbus,  Ohio. 

Hannevig,  J.  A.,  Pusey  &  Jones,  Gloucester  City,  N.  J. 

Hauptman,  Sidney  M.,  Shipowners  Association  of  Pacific  Coast,  also  vice 
president  and  treasurer  Charles  R.  McCormack  &  Co.,  Fife  Building, 
San  Francisco. 

Hardy,  Congressman,  member  Merchant  Marine  and  Fisheries  Committee. 
Harper,  R.  N.,  American  Bankers  Association,  Washington,  D.  C. 
Herr,  Mr.,  American  Exporters  and  Importers  Association,  New  York  City. 
Hibbard,  Capt.  L  N.,  United  States  Navy. 
Howard,  J.  R.,  Iowa  Farm  Bureau. 
Hunter,  T.  T.,  general  manager,  United  Transportation,  17  Battery  Place,  New 

York  City. 

Jardine,  W.  M.,  farmers  of  Kansas. 
Julier,  H.  V,,  Oriental  Navigation  Co.,  New  York. 
Knox,  W.  H.,  American  Exporters  and  Importers  Association,  also  National 

Foreign  Trade  Council,  New  York. 

Leach,  N.  M.,  representing  Mississippi  Valley  Association,  also  American  Ex- 
porters Association,  New  Orleans,  La. 

Leahy,  Mr.,  American  Exporters  and  Importers  Association,  New  York  City. 
LeBouteaux,  American  Marine  Insurance,  New  York  and  Philadelphia. 
Leroy,  E.,  National  Foreign  Trade  Council,  New  York  City. 
Lincoln,  F.  W.,  American  Exporters  and  Importers  Association,  New  York  City 
Long,  J.  Weller,  American  Society  of  Equity,  also  Farmers  National  Council. 
Lucas,  Emerson,  foreign  commerce  service,  Southern  Railroad  lines,  Washing- 
ton, D.  C. 

Lumas,  A.  M.,  National  Grange,  Washington,  D.  C. 
Magill,  J.  P.,  Harris-Magill  &  Co.,  50  Grove  Street,  New  York  City. 
Maguire,  J.  K.,  Mclntosh  &  Seymour,  Auburn,  N.  Y. 
Malone,  Mr.,  Staten  Island  Steamboat  Co.,  Staten  Island,  N.  Y. 
McGrath,  Justin,  University  Service,  Washington,  D.  C. 
Manson,  Philip,  president  Pacific  &  Eastern  Steamship  Co.  (Inc.),  New  York. 
Mason,  Mr.,  Pacific  Coast  Shipbuilders'  Association,  San  Francisco,  Calif. 
Marsh,  B.  C.,  secretary,  Farmers  National  Council,  New  York  City. 
MaGee,  W.  B.,  American  Marine  Insurance,  New  York  and  Philadelphia. 
McCarthy,  C.  H.,  Hanlon  Dry  Dock  Co.,  Union  Construction  Co.  (Pacific  coast). 
Moffett,  L.  W.,  Marine  Review,  New  York  City. 

Morrison,  Horace,  Commercial  Museum  Publications,  Philadelphia,  Pa. 
Munson,  Mr.  F.  E.,  American  Steamship  Association,  New  York  City. 
Myrick,  N.  Sumner,  vice  chairman  and  counsel,  committee  ocean  transportation, 

Chamber  of  Commerce,  Riggs  Building,  Washington,  D.  C. 
Minar,  New  York  Evening  Sun,  New  York. 
Newburgher,  Mr.,  American  Exporters'  and  Importers'  Association,  New  York 

City. 

Nute,  H.  N.,  president,  Atlantic  Maritime  Corporation,  New  York. 
O'Connell,    James,    American    Federation    of    Labor,    Washington,    D.    C. 


5 

Omerod,  Leonard,  Washington  Star,  Washington,  D.  C. 

Perkins,  Edmond  T.,  Mississippi  Valley  Association,  also  St.  Louis  Association 

of  Commerce,  St.  Louis,  Mo. 

Pew,  J.  N.,  jr.,  Atlantic  Coast  Shipbuilders'  Association,  Chester,  Pa. 
Plummer,  Edward  C.,  Atlantic  Carriers,  Bath,  Me. 
Powell,  J.  W.,  Atlantic  Coast  Shipbuilders'  Association,  30  Church  Street,  New 

~" 


quiun,  Stanley.   American   Exporters'  and  Importers'  Association,   New  York 

City. 

Ransdell,  J.  E.,  Senator,  Washington,  D.  C. 

Raymond,  H.  H.,  American  Steamship  Association,  New  York  City. 
Richter.  J.  F..  Central  News,  Gov.  Commerce,  Washington,  D.  C. 
Ring,  Welding,  Chamber  of  Commerce,  New  York  City. 
Robertson,  F.  E.,  State  College  of  Agriculture,  Ithaca,  N.  Y. 
Robinson,  Norborne,  Shipping  News  Service. 
Ross,  P.  H.  W.,  president,  National  Marine  League,  New  York. 
Royston,  M.  H.,  representing  Galveston  Chamber  of  Commerce,  port  of  Galves- 

ton  and  city  of  Galveston. 

Rush.  Benjamin,  American  Marine  Insurance,  New  York  and  Philadelphia. 
Saint,  N.  Y.,  United  States  Shipping  Board,  Bureau  of  Operations. 
Sawhill,  Ray  V.,  editor,  Marine  Review,  New  York  City. 
Schwerin.  R.  P.,  New  York  City. 

Sinclair,  J.  H..  Hon..  Member  of  Congress,  North  Dakota. 

Smith,  George  Edward,  American  Manufacturers'  and  Exporters'  Association. 
Smith,  Mr.,  American  Exporters'  and  Importers'  Association,  New  York  City. 
Smith,  James  E.,  Mississippi  Valley  Association,  St.  Louis,  Mo. 
Smith,  Landon  B..  port  agent,  Southern  Railway  lines,  401  Queen  and  Crescent 

Building.  New  Orleans,  La. 

Smull.  J.  B.7  New  York  Chamber  of  Commerce,  New  York  City. 
Steel,  Seimnes,  Mississippi  Valley  Association;  also  American  Exporters'  Asso- 

ciation, Galveston,  Tex. 

Stetson,  F.  A.,  International  News  Service,  New  York  City. 
Sterling.    Henry,    legislative    representative,    American    Federation    of    Labor, 

Washington,  D.  C. 

Struthers,  H.  R.,  Pacific  American  Steamship  Association.  San  Francisco. 
Sullivan,  William  F.,  attorney  and  secretary,  Shipowners'  Association  of  Pa- 

cific Coast,  112  Market  Street,  San  Francisco. 

Talbert,  R.  F.,  American  Marine  Insurance,  New  York  and  Philadelphia. 
Taylor,  J.  S.,  appointed  by  Mr.  Herrick  as  delegate  of  the  Mississippi  Valley 

Association,  Mobile.  Ala. 

Thomas,  E.  P.,  National  Foreign  Trade  Council,  New  York  City. 
Thompson,  M.,  Illinois  Agricultural  Association. 
Tumulty.  Mr.,  Staten  Island  Steamboat  Co.,  Staten  Island,  N.  Y. 
Walker,  J.  B.,  Scientific  American,  New  York  City. 
Walsh,  A.  B.,  National  Marine  League,  New  York  City. 
Weil,  Samuel,  chairman,  Foreign  Trade  Bureau,  Association  of  Commerce,  New 

Orleans,  La. 
Welch.  Howard  G.,  secretary  of  water-front  work  for  War  Camp  Community 

Service,  1518  Walnut  Street,  Philadelphia,  Pa. 
White,  Wallace  H.  J.,  Hon.,  Maine. 
Williams,  Nathan  D.,  National  Association  of  Manufacturers,  613  Union  Trust 

Building,  Washington,  D.  C. 

The  meeting  convened  at  10.30,  May  22,  1919. 

Mr.  HURLEY.  Gentlemen,  in  behalf  of  the  Shipping  Board  I  desire 
to  extend  to  each  and  every  one  of  you  a  hearty  welcome  and  to  thank 
you  for  your  kindness  in  responding  to  our  invitation  to  attend  this 
conference.  We  are  desirous  of  obtaining  first-hand  information. 
from  men  who  are  keenly  interested  in  the  development  of  our  mer- 
chant marine,  and  we  expect  to  profit  materially  by  this  meeting 
with  you. 

The  transportation  question,  both  on  land  and  on  sea,  is  most  vital 
to  the  future  of  our  country.  Our  overseas  trade  which  we  have  en- 
deavored to  develop  the  last  few  years  must  be  expanded  along  sound 


6 

business  lines,  and  the  first  step  is  a  permanent,  efficient  American  mer- 
chant marine.  If  our  ships  are  not  operated  efficiently,  it  will  mean 
high  freight  rates  for  our  farm  products  and  manufactured  articles. 
With  an  even  start  in  the  race  as  regards  the  cost  of  our  ships  as  com- 
pared with  foreign  ships,  we  can  not  continue  to  compete  and  have 
reasonable  freight  rates  unless  the  ships  are  operated  efficiently. 

We  all  have  different  points  of  view.  The  shipper  wants  reason- 
able freight  rates.  The  carrier  wants  reasonable  earnings.  These 
two  objections  are  not  inconsistent.  Efficient  operation  can  achieve 
them  both. 

Many  of  us  are  in  favor  of  private  ownership  and  operation,  feel 
ing  that  the  ships  can  be  more  efficiently  managed  in  this  way  than 
by  Government  ownership.    Others  are  disposed  to  favor  chartering 
for  a  period  of  years.    Still  others  are  sympathetic  toward  Govern- 
ment ownership. 

There  is  no  question  that  if  the  Government  sells  these  ships  to 
private  operators  an  equitable  distribution  should  be  made  so  that 
the  respective  sections  of  the  country  will  be  able  to  own  and  operate 
these  ships  out  of  their  respective  ports. 

The  ports  of  Wilmington,  Savannah,  Charleston,  Brunswick,  Jack- 
sonville, Pensacola,  Mobile,  New  Orleans,  Port  Arthur,  Los  Angeles. 
San  Francisco,  Portland,  and  Seattle  have  developed  wonderfully 
during  the  past  few  years  in  the  production  of  products  for  export, 
and  arrangements  must  be  made  whereby  each  section  of  the  country 
will  have  every  opportunity  to  establish  through  steamship  lines  iii 
connection  with  its  railroads  so  that  every  community  may  receive 
first-class  service.  These  ports  are  improving  their  terminal  facili- 
ties, and  when  these  improvements  are  made,  not  only  will  American 
ships  be  carrying  cargo  overseas  and  return  imports  from  other  coun- 
tries, but  foreign  ships  will  be  entering  these  ports  for  the  cargoes 
they  require. 

The  great  ports  of  Norfolk,  Baltimore,  Philadelphia,  New  York, 
Portland,  and  Boston  are  also  capable  of  taking  care  of  a  large 
amount  of  additional  tonnage,  and  the  efficiency  or  these  ports  with 
their  modern  methods  for  the  quick  turn-around  of  ships  has  been 
most  helpful. 

Fifty  per  cent  of  our  commerce  should  be  carried  in  American 
bottoms,  and  the  other  50  per  cent  should  be  carried  by  the  ships  of 
other  nations.  If  we  planned  to  carry  more  than  50  per  cent  it 
would  be  necessary  for  many  of  our  ships  to  return  in  ballast,  and, 
therefore,  we  would  not  hope  to  have  low  freight  rates. 

I  do  not  propose  to  touch  upon  the  question  of  how  the  Govern- 
ment should  dispose  of  these  ships,  for  it  is  your  views  on  the  subject 
that  we  are  assembled  to  learn.  However,  I  feel  that  I  should  out- 
line to  you  three  great  national  needs  which  our  merchant  fleet 
should  be  designed  to  fill  in  addition  to  the  freight  carriage  which 
is  its  function.  They  are:  (1)  The  establishment  and  maintenance 
of  an  American  ocean  mail  service  capable  of  covering  the  world. 
(2)  A  centrally  controlled  wireless  telegraph  service  for  use  in  pro- 
moting the  safety  of  life  and  property  at  sea  and  for  giving  to 
American  shipping  and  business  the  advantage  of  constant  commer- 
cial information.  (3)  Adequate  provision  for  the  training  of  an 
office  personnel  capable  of  making  sure  that  our  ships  will  always  go 
to  sea  in  charge  of  American  citizens. 


The  importance  of  an  American  overseas  mail  service  hardly  can 
be  overestimated.  In  the  creation  and  transaction  of  overseas  busi- 
ness it  is  second  in  importance  only  to  the  ships  themselves.  We 
never  have  had  an  American  overseas  mail  service.  In  the  trans- 
Atlantic  mail  service  we  never  have  had  more  than  one  American 
sailing  a  week,  and  we  are,  therefore,  dependent  upon  foreign  ships 
which  I  have  been  informed  have  at  times  refused  to  carry  our  mail. 

In  the  South  American  mail  service  foreign  steamships  always 
have  carried  all  the  mail  from  New  York  to  Venezuela,  the  Amazon, 
Hio  Janeiro,  and  Buenos  Aires.  In  many  cases  this  mail  did  not 
even  go  direct,  but  was  taken  3,200  miles  out  of  its  way  and  delayed 
10  days  going  by  way  of  England. 

The  shipping  Board  is  beginning  to  correct  this  condition  in  so 
far  as  it  lies  in  our  power  to  do  so.  But,  unfortunately,  this  trouble 
is  fundamental,  moored  hard  and  fast  by  the  precedents  of  half  a 
century;  and  it  can  not  be  corrected  merely  by  assigning  a  few 
American  vessels  to  certain  mail  routes.  We  must  discard  our 
present  laws  and  customs,  and  we  must  build  anew  on  sound  founda- 
tions and  business  principles. 

The  idea  that  mail  must  be  carried  only  in  fast  passenger  vessels 
is  fallacious.  If  we  had  daily,  or  even  odd  day,  sailing  of  such  ves- 
sels, no  doubt  the  mail  should  go  in  them.  But  we  have  not  a  suffi- 
cient number  of  such  vessels  to  make  daily  or  odd-day  sailings,  and 
the  needs  of  our  trade  do  not  call  for  any  such  number  of  them. 
We  ought  to  send  out  mail  by  the  12  and  14  knot  freight  liners  as 
well  as  by  the  18  and  20  knot  passenger  liners.  Then  we  could 
count  on  frequent  sailings  in  every  trade  route,  and  the  service 
would  average  better,  both  in  time  and  reliability,  than  any  service 
we  have  ever  gotten  from  foreign  steamship  companies.  Then,  too, 
there  is  a  certain  psychological  factor  which  should  not  be  ignored. 
It  would  look  more 'businesslike  to  have  the  American  mails  arrive 
in  the  ships  which  bring  American  goods. 

We  handle  our  domestic  mails  on  a  business  basis,  and  we  should 
do  the  same  thing  with  our  overseas  mail.  We  pay  the  railroads, 
the  railway  mail  clerks,  the  postmasters,  the  post-office  clerks  and  the 
city  and  rural  letter  carriers  fair  fees  and  salaries  for  public  serv- 
ice rendered.  We  do  not  ask  the  citizen  -who  passes  through  a 
given  street  morning  and  evening  to  deliver  the  mail  to  his  neigh- 
bors whenever  he  feels  like  earning  so-many  cents  a  pound  for  all 
the  mail  he  so  delivers. 

Yet  this  is  exactly  the  basis  on  which  we  are  now  trifling  with 
such  an  important  branch  of  the  public  service  as  our  overseas  mail. 
The  chief  reason  why  we  get  any  ocean  mail  service  at  all  is  because 
a  ship  happens  to  be  making  the  voyage  anyway,  and  might  as  well 
take  a  few  sacks  of  mail  along  as  not.  The  present  ocean  mail  fee 
is  only  80  cents  a  pound  for  letters  and  4  cents  a  pound  for  printed 
hatter — hardly  a  business  proposition  or  a  fair  return  for  service 
rendered  in  most  trade  routes. 

We  should  change  all  this.  We  have  a  law  which  permits  us  to 
pay  $8  a  mile  on  the  outward  voyage  to  vessels  carrying  the  mail  at 
a  speed  of  35  knots  an  hour,  and  $4  a  mile  to  vessels  making  20 
knots.  This  law  as  it  applies  to  the  35 -knot  ship  is  doing  us  no  good, 
because  we  have  no  such  vessels,  and  the  needs  of  our  trade  prob- 
ably never  will  require  a  sufficient  number  of  them  to  handle  all  our 


8 

overseas  mail.  We  should  establish  at  once  a  real  American  ocean 
mail  service  which  would  efficiently  serve  American  trade  if  we 
would  change  this  law  so  as  to  bring  it  down  from  the  realm  of  im- 
practicability and  make  it  apply  to  the  seagoing  units  which  we 
actually  possess,  and  of  which  we  expect  the  bulk  of  our  future  fleet 
will  be  composed. 

It  would  be  well  to  reduce  the  $8  rate  to  $6  and  make  it  apply  to 
20-knot  vessels  because  we  expect  to  have  some  liners  making  20  or 
25  knots.  We  need  not  seriously  consider  the  35-knot  ship  in  our 
general  ocean  mail  scheme  for  two  reasons:  First,  the  number  of 
them  alwyays  will  be  small ;  and  second,  the  superiority  of  their  total 
service  over  that  rendered  by  all  the  20  and  25  knot  ships  would  not 
seem  to  warrant  the  extra  payment  of  $2  a  mile.  And  such  pay- 
ment not  rigorously  based  upon  service  rendered  would  be  open  to 
the  appellation  "subsidy"— a  thing  to  which  many  of  us  are  un- 
alterably opposed  on  principle. 

If  the  $6  rate  were  paid  to  20-knot  ships,  the  $4  rate  to  14-knot 
ships,  and  the  $2  rate  to  12-knot  ships,  I  firmly  believe  we  would 
have  an  efficient  American  ocean  mail  service  capable  of  covering 
the  world,  and  of  placing  every  American  farmer,  manufacturer, 
and  merchant  in  direct  touch  with  each  and  every  one  of  his  foreign 
customers.  You  will  all  readily  admit  that  the  money  value  of  such 
a  service  to  the  American  people  would  be  difficult  to  overestimate. 

Simultaneously  with  the  establishment  of  a  general  ocean  mail 
service  on  business  principles,  we  should  include  an  overseas  exten- 
sion of  the  parcel  post.  Properly  carried  out  on  a  larger  scale  it 
would  require  the  presence  on  each  mail  ship  of  a  duly  appointed 
United  States  overseas  mail  officer  to  look  out  for  parcel-post  pack- 
ages and  the  mail.  These  duties  could  be  conveniently  combined 
with  those  of  the  supercargo,  who  is  the  business  man  on  all  Gov- 
ernment ships  in  charge  of  the  cargo  aboard  and  who  at  present  is 
also  performing  excellent  service  as  the  trade  scout  of  American 
industry. 

Eegarding  the  presence  of  the  wireless  telegraph  on  board  each 
vessel  flying  the  American  flag,  I  need  not  add  to  what  I  already  have 
said.  There  is  no  question,  however,  that  the  wireless  should  be 
Navy  manned  under  Navy  control  for  three  reasons :  First,  it  would 
render  more  efficient  the  use  of  the  wireless  for  the  protection  of  life 
and  property  at  sea.  Second,  it  would  enable  our  merchant  ships  to 
communicate  commercial  information  to  each  other  and  to  their 
home  offices.  Third,  this  control  would  make  easy  the  instant  mobi- 
lization and  protection  of  the  whole  fleet  in  case  of  war. 

Lastly,  I  wish  to  lay  before  you  the  necessity  for  using  our  fleet 
for  training  American  citizens  to  be  its  future  officers.  This  matter 
is  so  vital  to  the  public  interest  that  the  Government  should  under- 
take to  supervise  and  finance  it. 

Desk  and  engineer  cadets  should  be  carried  in  all  vessels,  three  or 
four  in  small  cargo  steamers  and  six  or  eight  in  large  liners.  They 
should  be  selected  from  the  rank  and  file  of  the  boys  who  elect  to 
follow  the  sea,  perhaps  by  competitive  examinations  held  by  the 
steamboat  inspectors  at  the  customhouses  under  the  direction  of  the 
Civil  Service  Commission. 

The  cadets  should  be  paid  $50  a  month  the  first  year  and  $70  a 
month  the  second  year.  The  officers  of  the  ships  should  be  required 


to  give  them  professional  schooling  and  the  Government  should  pay 
the  private  steamship  company  $25  a  month  for  the  tuition  of  each- 
cadet,  in  addition  to  $15  a  month  for  maintenance.  If  it  is  worth 
while  to  pay  $50,000  to  train  a  naval  officer,  does  it  not  seem  equally 
in  the  public  interest  to  spend,  say,  $2,400  a  man  for  the  creation  of 
an  American  personnel  to  command  the  fleet  with  which  we  expect 
to  keep  the  American  flag  on  the  seas. 

Perhaps  I  ought  to  ask  your  indulgence  for  having  said  so  much 
about  matters  which  do  not  bear  directly  upon  the  questions  of  owner- 
ship and  operation  which  we  are  here  to  discuss.  However,  they 
are  matters  which  bear  directly  upon  the  usefulness  of  the  merchant 
marine  to  the  American  people,  no  matter  who  owns  the  ships  or 
who  operates  them,  and  as  such  they  can  not  fail  to  help  to  keep  us 
mindful  of  the  vital  national  importance  of  the  subject  we  are  about 
to  discuss. 

Gentlemen,  in  opening  the  meeting,  it  has  been  suggested  that  we 
first  start  out  and  hear  from  the  gentlemen  who  are  in  favor  of  the 
Government  ownership  and  operation,  and  I  am  going  to  ask  Mr. 
Marsh  of  the  Farmers'  National  Council,  Washington,  D.  C. 

Mr.  MARSH.  Mr.  Chairman  and  members  of  the  conference,  I  want 
to  express  a  feeling  of  very  sincere  diffidence  in  attempting  to  speak 
for  the  farmers,  in  view  of  the  act  that  there  are  present  here  this 
morning  Mr.  Hampton,  managing  director  of  the  council,  Dr.  Long, 
Dr.  Atkinson,  Washington  representatives  of  the  National  Grange, 
and  Mr.  C.  H.  Gustaf son,  president  of  the  Nebraska  Farmers'  Union ; 
but  I  am  talking  only  in  a  representative  capacity,  and  I  want  to 
read  to  you  the  position  of  the  Farmers'  National  Council  on  the 
question  of  the  Government  ownership  and  operation  of  a  merchant 
marine,  a  position  which  was  reached  after  careful,  very  careful 
deliberation  at  the  Farmers'  National  Eeconstruction  Conference 
held  in  Washington  during  January,  1919.  That  conference  was 
composed  of  delegates  and  representatives  of  the  American  Federa- 
tion of  Gleaners,  and  the  American  Society  of  Equity.  Among  those 
present  were  Dr.  Long,  Mr.  Gustaf  son,  and  several  of  the  largest 
State  farmers'  unions,  including  the  Nebraska  Farmers'  Union. 
Many  of  the  western  State  granges  were  represented  by  delegates 
and  also  numerous  small  organizations. 

I  was  requested  this  morning  to  speak  for  North  Dakota  on  this 
matter  by  Congressman  Sinclair,  who  has  also  secured  the  indorse- 
ment of  Gov.  Lynn  J.  Frazier,  of  North  Dakota,  in  reference  to  the 
position  we  are  taking.  The  National  non-Partisan  League  was  rep- 
resented officially  at  this  conference  on  reconstruction  held  in  Janu- 
ary, 1919,  by  four  delegates. 

Now  here  is  our  position,  gentlemen,  unequivocal,  from  which 
there  will  be  no  receding  and  which  is,  if  I  may  put  it  that  way, 
really  our  mandate  to  Congress  regarding  the  disposition  of  ships 
constructed  from  the  taxes  paid  by  the  men  and  women  who  have 
won  the  war. 

Enormous  sums  have  been  expended  by  the  Government  in  con- 
structing these  ships.  The  vessels  so  constructed  at  Government  ex- 
pense should  remain  the  property  of  the  people  of  the  country  and 
should  be  operated  as  a  merchant  marine  for  the  benefit  of  the  people 
as  a  whole,  with  due  regard  to  terms  and  conditions  of  employment. 


10 

Now  I  presume  that  Dr.  Atkeson,  representing  the  National 
Grange,  will  speak  for  them,  and  the  Farmers'  National  Council  does 
not  in  any  way  represent  the  National  Grange  but  a  number  of  the 
Western  'State  granges.  However,  in  1914,  the  National  Grange 
adopted  this  resolution  at  their  meeting,  if  I  remember  correctly,  I 
think  it  was  held  in  1914,  at  Wilmington,  Del. : 

Resolved,  That  if  Government  funds  are  to  be  used  to  aid  in  building  the 
American  merchant  marine  that  it  should  be  used  for  ships  to  be  owned  and 
operated  by  the  Government. 

We  have  crossed  that  bridge,  we  have  constructed  these  ships  with 
Government  money,  with  our  money. 

In  1915  the  Pennsylvania  State  Grange  adopted  the  following 
resolution.  The  Pennsylvania  State  Grange,  if  my  memory  serves 
me  correctly,  is  the  second  largest  State  grange,  and  the  resolution  is : 

Resolved,  That  in  order  to  stabilize  such  rates  we  favor  the  building  of  a 
Government  owned  and  operated  merchant  marine,  with  free  ports  of  entry 
to  all  ships  of  such  merchant  marine. 

There  is  a  preamble  as  to  rates. 

We  are  encouraged,  deeply  encouraged,  gentlemen,  in  this  matter. 
I  have  received  a  copy  of  a  letter  from  Mr.  Rosseter,  Chief  of  the  Di- 
vision of  Operations,  directed  to  Chairman  Hurley,  dated  April  26, 
if  I  remember  correctly,  discussing  this  question  of  American  mer- 
chant marine.  He  says: 

The  prize  is  a  great  one.  Aside  from  the  feeling  of  national  pride,  and  in 
consideration  of  the  national  security,  our  merchant  marine  will  bring  an  in- 
creased revenue  amounting  to  more  than  $500,000,000  a  year  to  our  national 
resources,  which  is  a  very  moderate  estimate  but  small  in  comparison  to  the 
great  increase  in  trade. 

Now,  gentlemen,  the  farmers  contend  if  there  is  a  profit  of 
$500,000,000,  and  I  am  speaking  for  the  Farmers'  National  Council 
when  I  use  the  word  "  farmers,"  that  some  one  must  pay  high  freight 
rates  to  produce  that  profit,  and  the  farmer  refuses  to  be  made  the 
goat  of  any  privately  privileged  shipping  concern  again  in  the 
United  States.  That  is  a  pretty  fair  profit.  Now,  of  what  concern 
is  this  to  the  farmer  ?  Of  course,  the  export  of  farm  products  has  not 
been  very  large.  I  am  speaking  from  memory ;  if  I  am  not  mistaken 
it  was  about  $1,540,000,000  in  1917,  and,  perhaps,  in  excess  of  two 
billion  last  year,  but  we  are  going  to  feed  the  world  in  a  large  meas- 
ure for  some  years  to  come.  Necessarily ;  otherwise,  we  would  have 
a  spread  of  hunger  strikes,  which  would  bring  about  a  very  undesir- 
able condition.  The  farmers  must  export  a  great  deal  of  their  prod- 
ucts, and  for  that  reason  they  are  in  favor  of  Government  operation 
and  ownership  of  the  vessels  constructed  by  the  Government  because, 
not  merely  do  they  know  that  rates  will  be  lower,  in  all  probability— 
certainly,  there  will  be  no  $500,000,000  melons  to  be  cut  annually,  as 
is  suggested  under  private  ownership  of  the  ships  we  have  con- 
structed with  our  money — but  the  farmers  will  get  something  which 
is  equally  important  to  them,  and  that  is  equality  of  service  and  no 
discrimination ;  equality  of  freight,  general  freight  rates. 

You  gentlemen  know  perfectly  well  that  a  difference  of  25  cents, 
or  possibly  of  10  cents — 15  cents  on  carrying  of  wheat  in  bulk  across 
the  ocean — may  make  or  break  the  farmer,  and  the  farmers  do  not 
want  to  be  subjected  to  that  danger. 


11 

I  very  much  hope  that  Mr.  Gustafson,  the  president  of  this  organi- 
zation in  Nebraska,  which  is  doing  a  cooperative  business  of  about 
$100,000,000  per  annum,  will  explain  to  you  the  reason  why  farmers 
going  into  cooperative  business  do  not  care  to  trust  to  private  owner- 
ship, because  they  feel  they  will  have  to  buck  a  combination  which  is 
pretty  strong. 

Now,  gentlemen,  when  you  come  to  think  of  Government  operation 
of  railroads — for  we  have  never  had  Government  ownership — you 
will  realize  that  it  has  been  about  the  most  efficient  organization  in 
the  United  States  during  the  war.  You  will  admit  it  as  soon  as  you 
figure  this  out  of  the  percentage  in  increased  rates,  what  percentages 
would  have  been  necessary  to  meet  current  expenses.  Compare  that 
small  increase  of  12  or  14  per  cent,  or  possibly  15  per  cent,  with  the 
rate  of  increase  in  wages,  with  the  rate  of  increase  in  the  cost  of  farm 
products,  or  the  rate  of  increase  of  all  manufactured  products,  and 
then,  gentlemen,  the  increase  in  cost  of  operation  of  railroads,  you 
will  find  out  what  a  small  increase  this  is  in  comparison  with  the  in- 
creased profits  of  the  big  business  men  of  this  country.  You  will  also 
note  that  the  most  conspicuous  thing  in  the  world  to-day  is  the  busi- 
nesslike and  economic  governmental  operation  of  railroads  taken  over 
under  the  most  adverse  conditions. 

We  are  not  worried  in  the  slightest  way  over  the  question  of  the 
efficient  and  economic  governmental  operation  of  the  merchant 
marine.  Isn't  it  gratifying  to  know  that  it  was  a  Government  de- 
partment which  organized  the  first  trans- Atlantic  flight?  No  one 
thought  it  could  be  done ;  at  least,  not  for  years  to  come,  but  it  was 
through  the  assiduous  working  of  Secretary  Daniels  and  his  asso- 
ciates in  the  Navy  Department  who  organized  that  flight.  We  have 
seen  marvelous  exhibitions  of  governmental  efficiency  during  the  war. 
Of  course,  we  have  seen  some  manifestations  of  failure,  but,  if  I  re- 
member correctly,  the  mortality  list  among  American  business  con- 
cerns in  America  is  approximately  40  or  50  per  cent,  and  the 
Government  does  not  show  any  such  percentage  of  failure  in  its 
undertakings. 

I  told  Mr.  Hurley  I  would  try  to  take  about  15  minutes  only  to  lay 
these  matters,  if  you  please,  gentlemen,  before  you — the  conclusions 
of  the  farmers  of  America  on  this  question.  We  deeply  regret,  and 
in  complete  courtesy  to  the  chairman  I  would  say  we  deeply  regret 
that  any  of  our  ships,  or  any  considerable  number,  have  been  sold  up 
to  date.  I  say  "  our  ships."  The  people's  ships  have  been  sold,  but 
in  some  cases,  I  understand,  there  was  full  occasion  to  sell,  and  we 
have  written  Mr.  Hurley  urging  as  strongly  as  possible  that  no  more 
of  these  ships  be  sold. 

Xow,  of  course,  you  may  have  to  write  down  the  cost  of  construc- 
tion. That  is  demanded,  because  of  the  high  war  costs;  that  is 
demanded  by  the  gentlemen  who  are  saying  to  the  Government, 
:<  Turn  over  the  ships  to  us  now  and  write  them  down  to  the  lowest 
figure."  It  unquestionably  would  be  similarly  necessary  under  Gov- 
ernment operation  of  the  ships,  because  we  have  got  to  get  into  com- 
petition with  the  othe,r  ocean-carrying  nations  of  the  world,  and  we 
do  not  want  to  have  too  high  a  basis  on  which  to  earn  dividends. 

Thank  Heaven  we  have  not  got  to,  as  in  the  case  of  the  railroads, 
guarantee  exorbitant  dividends  upon  seven  or  eight  billion  dollars  of 


12 

stocks.  In  the  case  of  a  merchant  marine,  Government-owned  to-day,, 
to  be  retained  and  operated  by  the  Government,  we  stand  on  what  is 
clearly  a  basis  for  a  careful  consideration  and  a  careful  experiment^ 
if  you  please  to  so  designate  it,  of  Government  operation  as  is 
humanly  possible,  and,  gentlemen,  that  is  our  position. 

We  are  going  to  have  our  boys  on  these  ships,  as  Mr.  Hurley  has 
outlined  in  his  address,  and  the  American  merchant  marine  is  "to  be 
conducted,  not  to  increase  the  millionaires  of  America,  nor  is  it  to 
be  used  as  a  profit-making  concern.  We  sincerely  hope,  as  in  the 
case  of  Government  ownership  and  operation  of  the  railroads,  which 
is  as  inevitable  as  the  election  of  some  party  in  the  next  national  elec- 
tion, we  trust  that  the  operation  of  these  vessels  will  be  democratic 
and  that  the  men  who  operate  the  ships  will  have  a  fair,  I  do  not 
say  major,  but  a  fair  proportion  of  the  management  of  this  national 
enterprise.  But  the  basic  point  is  that  these  ships,  constructed  by  our 
money — with  our  money — are  not  to  be  profit-making  concerns,  seek- 
ing to  lay  up  a  reserve.  They  are  to  be  what  every  natural  monopoly 
in  a  real  democracy  must  be — an  instrument  to  develop  the  com- 
merce and  the  manufacture  and  the  agriculture  of  the  country,  and 
to  do  it  merely  by  being  run  at  cost  and  not  as  millionaire  makers. 
That,  I  think,  correctly  interprets  the  position  of  the  farmers  in  the' 
matter  and  is  their  final  decision  thereon,  and  we  thank  you  very 
much,  Mr.  Chairman,  for  giving  us  the  opportunity  to  present  our 
viewrs. 

Mr.  HURLEY.  Mr.  March,  would  you  object  to  having  the  gentlemen 
ask  you  some  questions? 

Mr.  MARSH.  I  would  be  glad  to  have  questions  asked,  but  I  want 
to  tell  you  one  thing,  they  can  ask  me  a  lot  of  questions  that  I  can 
not  answer,  and  I  can  ask  them  a  lot  of  questions  that  they  won't 
answer.  [Laughter.]  There  was  only  one  happy  year  in  my  life 
when  I  could  answer  any  questions  put  to  me  right  off  the  bat,  and 
that  was  when  I  was  a  sophomore  in  college.  [Laughter.] 

Mr.  HURLEY.  Mr.  Rosseter  has  a  point  to  ask  you  in  connection 
with  his  letter. 

Mr.  ROSSETER.  Yes,  Mr.  Marsh,  just  to  get  the  record  straight.  I 
think  you  did  it  inadvertently,  but  you  have  misunderstood  that  para- 
graph of  my  letter  to  which  you  referred. 

Mr.  MARSH.  Which  paragraph  was  that? 

Mr.  ROSSETER.  The  one  you  read — "  will  bring  more  than  $500,000,000 
a  year  to  our  national  resources."  You  have  misunderstood  that  to 
be  profit.  Resources  are  not  profit. 

Mr.  MARSH.  Sometimes. 

Mr.  ROSSETER.  That  is  true,  sometimes,  but  in  this  case  it  is  not. 

Mr.  MARSH.  I  see;  you  included  the  whole  receipts. 

Mr.  ROSSETER.  I  am  estimating  what  it  means  in  the  way  of  wages 
that  will  come  to  our  people ;  the  whole  organization  of  the  maritime 
enterprise  which  comes  through,  say,  50,000  or  150,000  or  200,000 
Americans  manning  the  ships ;  the  facilities  either  in  the  ports  at  home 
or  abroad  being  in  American  hands.  It  means  the  receipt,  through 
American  resources,  of  all  moneys  now  paid  to  foreigners. 

Mr.  MARSH.  I  am  glad  to  be  corrected.  May  I  ask  a  question? 
Would  it  be  the  impression,  under  private  ownership  of  these  ships, 
with  the  cost  of  construction  written  down  to  meet  the  pocketbooks 


13 

of  those  who  want  to  get  control  of  them,  would  it  not  be  the  purpose 
to  make  some  profits? 

Mr.  ROSSETER.  You  mean  profits  in  the  ordinary  pursuit  of  the 
business  ? 

Mr.  MARSH.  All  it  will  bear. 

Mr.  ROSSETER.  Profits  are  a  peculiar  thing.  They  are  measured 
best  by  management.  The  waste  of  a  poorly  devised  system  is  more 
serious  and  of  a  larger  percentage  than  the  profits.  For  instance, 
we  will  take  on  the  gross  revenue  of  a  billion  dollars  of  freight.  The 
charges  and  the  revenue  like  that  would  run  as  much  as  $800,000,000 
out  of  a  billion.  The  entire  margin  would  be  20  per  cent.  Twenty 
per  cent  can  be  wasted  in  inefficient  operation — could  be  wasted  from 
the  fact  that  voyages  are  not  balanced  right.  Then  there  is  endless 
•competition,  not  only  among  ourselves,  but  with  foreigners ;  there  is 
the  problem  of  properly  conserving  and  properly  developing  the 
most  efficient  instruments  of  commerce. 

Mr.  MARSH.  Would  you  mind  telling  me  what  the  profits  of  some 
of  the  big  shipping  companies  were  after  the  war  began  and  before 
we  got  into  it? 

Mr.  ROSSETER.  The  profits  were  simply  enormous ;  there  is  no  ques- 
tion about  that. 

Mr.  MARSH.  Don't  they  want  them  now  ? 

Mr.  ROSSETER.  I  don't  think  so ;  if  they  do  they  certainly  will  not 
have  them. 

Mr.  MARSH.  Who  is  going  to  control  the  rates? 

Mr.  ROSSETER.  As  in  the  past,  it  is  going  to  be  controlled  by  com- 
petition. 

Mr.  MARSH.  But  they  were  enormous  during  the  war,  and  haven't 
they  been  pretty  heavy  before  the  European  war  started? 

Mr.  ROSSETER.  No,  not  before  the  war  started.  I  have  been  in  the 
business  for  30  years — three  decades — and  the  voyage  returns  on  the 
shipping  interests,  my  own  and  others,  which  I  have  studied,  have 
averaged  less  than  6  per  cent. 

Mr.  MARSH.  On  what  capitalization? 

Mr.  ROSSETER.  On  the  capitalization  required  in  each  instance. 

Mr.  MARSH.  Didn't  the  Government  control  the  capitalization,  and 
pass  upon  whether  it  was  valid  ? 

Mr.  ROSSETER.  I  am  afraid  we  are  getting  a  little  afield.  I  don't 
want  to  appear  as  avoiding  your  questions.  The  American  capitaliza- 
tion in  shipping  as  compared  to  foreign  capitalization,  prior  to  the 
war,  you  know  was  insignificant.  We  had  only  three  American  over- 
seas steamship  companies  operating  under  the  American  flag.  We 
had  a  lot  of  ships  in  the  Lakes  and  in  the  coastal  service,  but  our 
overseas  trade  cwas  represented  by  a  decimal  point  in  the  world's 
trade. 

Mr.  MARSH.  Somebody  made  profits  in  the  carrying  business ;  that 
was  my  point. 

Mr.  ROSSETER.  The  profits  prior  to  the  war,  over  a  period  of 
30  years,  will  average  less  than  6  per  cent. 

Mr.  MARSH.  For  the  whole  world  ? 

Mr.  ROSSETER.  Yes;  that  means  British,  Japanese,  and  American. 
In  fact,  shipping  has  been  one  of  the  most  disastrous  forms  of  in- 
vestment, particularly  for  men  who  have  not  been  wise  in  the  busi- 
ness. There  are  more  wrecks  strewn  along  the  coast  in  shipping  en- 


14 

terp rises  than  in  any  other  business,  not  even  excepting  the 
farmer. 

Mr.  MARSH.  I  am  afraid  you  are  not  in  close  touch  with  the 
farmers.  May  I  ask  you  another  question?  If  this  business  is  so  dis- 
astrous, why  in  the  name  of  common  sense  do  you  men  want  to  do 
all  of  it. 

Mr.  DONALD.  You  farmers  can  come  in  and  take  your  share,  if  you 
so  desire. 

Mr.  MARSH.  We  are  going  to  do  it  through  the  Government. 

Mr.  ROSSETER.  You  have  jumped  at  an  erroneous  conclusion.  There 
is  nobody  here,  least  of  all  myself,  who  wants  to  do  any  part  of  it, 
except  under  a  well-recognized  scheme.  The  more  new  people  we 
can  get  into  the  shipping  business,  the  more  sure  we  are  going  to  be 
of  success. 

Mr.  MARSH.  I  think,  if  I  remember  right,  that  a  similar  argument 
was  made  by  the  railroads  a  few  years  ago,  and  it  did  not  seem  to 
work  out  in  any  marked  reduction  of  freight  rates.  Now,  didn't  the 
big  shipping  companies  try  for  some  time,  and  finally  succeed,  in 
practically  exterminating  the  tramp  steamer? 

Mr.  ROSSETER.  No ;  on  the  contrary,  the  tramp  steamer  tonnage  of 
the  world  has  been  represented  as  80  per  cent,  and  20  per  cent  has 
been  regular  lines.  The  mistake  we  have  made  all  over  the  world, 
as  compared  with  the  Germans,  having  80  per  cent  in  the  tramp  and 
20  per  cent  in  the  regular,  is  that  the  Germans  have  90  per  cent  regu- 
lar and  10  per  cent  tramp. 

Mr.  MARSH.  Have  you  seen  the  report  of  the  inroads  made  by  the 
German  and  British  commerce  in  Asia  Minor? 

Mr.  ROSSETER.  I  have,  and  I  have  read  it  with  particular  and  sym- 
pathetic interest,  because  for  nine  years  I  went  through  a  death  strug- 
gle with  the  Germans  myself. 

Mr.  HURLEY.  What  we  would  like  to  get  at  is  something  concrete 
and  definite.  Your  chief  objection  is  the  write  off? 

Mr.  MARSH.  Pardon  me? 

Mr.  HURLEY.  The  writing  down  of  war  costs  ? 

Mr.  MARSH.  No,  it  is  not  to  the  writing  down  of  war  costs,  because 
that  is  probably  a  question  of  national  policy,  whether  the  ships  be 
privately  owned  or  retained  by  the  Government.  It  is  not  solely 
that.  But  there  is  no  power  to-day  which  controls  ocean  rates — I 
mean  before  the  war — there  is  nothing  except  the  agreements,  practi- 
cally, of  the  large  shippers,  and  the  point  is  that  the  farmers  know 
perfectly  well  that  if  rates  were  reasonably — the  farmers  could  not 
be  assured  of  equality  of  service  on  the  part  of  yie  ocean  carrying 
freight  steamers  under  private  ownership.  Of  course,  we  all  know  how 
the  farmers'  products  have  been  gambled  in,  partly  because  of  private 
ownership  of  the  ocean  carrying  trade,  and  for  that  reason  they 
want  the  Government  to  own  and  operate  it,  and  they  propose  to  keep 
close  tab  on  the  Government  and  hold  it  responsible. 

Mr.  HURLEY.  That  phase  of  it  is  regardless  of  the  write  off.  If 
the  Government  did  not  write  off  anything  and  sold  these  ships,  you 
would  be  opposed  to  it? 

Mr.  MARSH.  We  would,  because  if  they  do  write  it  off,  it  comes  out 
of  our  taxes. 

Mr.  HURLEY.  What  percentage  of  the  farmers  are  in  favor  of  Gov- 
ernment ownership,  and  what  percentage  in  favor  of  private  owner- 
ship? 


15 

Mr.  MARSH.  As  I  said  before,  I  can  not  tell. 

Mr.  HURLEY.  How  many  farmers  do  you  represent?  Let  me  get 
this  clear.  Do  you  know  of  any  farmers  in  favor  of  private  owner- 
ship? 

Mr.  MARSH.  I  know  of  a  good  many  farmers,  a  good  many  thou- 
sands, but  there  are  several  million  farmers  in  the  United  States,  and 
I  do  not  know  Avhat  number  there  are  in  favor  of  private  ownership. 
There  is  a  different  question  involved  here,  for  which  reason  I  read 
the  resolution  of  the  National  Granges.  We  have  crossed  a  bridge. 
We  have  built  the  ships.  They  are  now  ours,  and  in  view  of  the 
great  difficulties  we  are  having  to  get  ownership  of  the  railroads  we 
say,  "For  goodness  sake,  if  this  thing  is  now  in  our  hands,  a  bird  in 
the  hand  is  worth  a  half  dozen  in  the  bush." 

Mr.  HURLEY.  What  the  Shipping  Board  is  anxious  to  determine, 
and  we  are  very  much  interested  in  your  remarks,  for  our  satisfac- 
tion as  well  as  the  satisfaction  of  the  other  gentlemen  present,  we 
would  like  to  have  you  explain  just  who  you  represent  and  how  many 
farmers  your  organization  represents. 

Mr.  MARSH.  I  would  be  glad  to  repeat — I  probably  made  a  state- 
ment hurriedly  in  starting 

Mr.  HURLEY.  Give  us  the  number  of  associations:  put  it  on  the 
record.  How  many  members  are  in  your  different  organizations? 

Mr.  MARSH.  Dr.  J.  W.  Long  is  here  and  can  speak  as  to  that.  As 
to  the  number,  there  are  about  140,000  or  145,000  members. 

Mr.  HURLEY.  Members  or  organizations? 

Mr.  MARSH.  Members :  this  is  one  component  body  of  the  Farmers' 
National  Council,  united  to  carry  out  this  program.  There  are 
145,000,  if  I  remember  correctly. 

Mr.  HURLEY.  Are  these  145,000  in  favor  of  Government  owner- 
ship? 

Dr.  LONG.  As  chairman  of  the  resolutions  committee  in  our  organi- 
zation for  a  good  many  years,  I  want  to  say  that  they  have  passed 
resolution  after  resolution  advocating  public  ownership  of  public 
utilities  for  the  past  10  years. 

Mr.  HURLEY.  How  long  since  that  resolution  was  passed  ? 

Dr.  LONG.  The  12th  day  of  December  last  year. 

That  was  a  national  convention.  Not  only  that,  but  the  reconstruc- 
tion program,  the  position  of  which  was  read  here,  was  adopted  in 
toto  by  this  organization,  because  I  was  a  party  to  the  writing  of  the 
program,  the  reconstruction  program,  and  it  was  the  first  organiza- 
tion— ours  was  the  first  organization  that  had  anything  to  do  with 
the  reconstruction  program.  It  was  not  only  indorsed  and  passed 
by  our  National  Convention,  but  also  the  Wisconsin  State  convention, 
of  which  I  was  a  delegate  also. 

Mr.  HURLEY.  Mr.  March,  how  many  farmers  are  there  in  America  ? 

Mr.  MARSH.  Now  you  mean,  of  course,  exclusive  of  hired  men? 

Mr.  HURLEY.  Just  farmers;  I  don't  care — whichever  way  you 
care  to  put  it.  That  is  what  I  am  trying  to  get.  I  am  trying  to 
get  the  proportion  of  your  organization. 

Mr.  MARSH.  I  can't  give  the  figures  with  all  the  changes  that  have 
occurred. 

Mr.  HURLEY.  Well,  four  or  five  million? 

Mr.  MARSH.  There  are  over  6,000,000  farmers  operating  in  Amer- 
ica. There  are  only  about  2,000,000,  possibly  a  little  over  2,000,000, 


16 

farmers  in  definitely  and  specifically  organized  farmers'  organiza- 
tions— what  we  call  organized  farmers — substantially  something 
around  2,000,000.  I  can't  give  the  exact  figures. 

Let  me  illustrate:  For  instance,  the  Farmers'  National  Union,  a 
southern  organization,  has  been  claiming  2,000,000  organized  farm- 
ers; their  last  convention,  last  month,  showed  they  had  only  144,000 
instead  of  2,000,000.  So  we  have  to  go  carefully  over  the  poll  of 
the  membership. 

Then  another  organization  of  farmers  which  has  endorsed  this 

¥lan  is  the  National  Nonpartisan  League,  with  about  250,000.  Am 
right,  Congressman  Sinclair?  Congressman  Sinclair  of  North 
Dakota  will  confirm  me.  Mr.  Hampton,  managing  director  of  the 
Farmers'  National  headquarters  here  is  present,  and  I  understand 
>that  there  are  about  150,000,  roughly,  members  in  the  American 
Federation  of  Gleaners.  Am  I  right,  Mr.  Hampton? 

Mr.  HAMPTON.  That  is  right. 

Mr.  MARSH.  There  are  hundreds  of  thousands  of  farmers  organ- 
ized in  the  State  granges  and  the  farmers'  unions  which  participated 
in  this  conference. 

And  then,  Mr.  Hurley,  I  have  read  you  the  resolution  adopted 
!by  the  Pennsylvania  State  Grange  which  was  not  represented  at  this 
conference,  unequivocally  approving  of  Government  ownership  and 
operation. 

Mr.  HURLEY.  That  was  in  1914? 

Mr.  MARSH.  That  was  in  1915.  The  national  resolution  that  I 
read  was  in  1914;  yes,  the  year  preceding.  So  that  750,000  organ- 
ized farmers  at  least  plus  the  70,000  Pennsylvania  State  Grange — 
say  roughly  over  850,000  organized  farmers,  we  know,  are  in  favor 
of  this;  and  I  think  I  am  safe  in  saying  that  an  overwhelming  ma- 
jority of  the  organized  farmers  of  America  favor  Government  owned 
•and  democratically  operated  merchant  marine. 

Mr.  HURLEY.  Do  you  feel  that  you  speak  for  850,000  farmers? 

Mr.  MARSH.  On  this  matter,  yes;  very  clearly.  And  I  believe 
1  am  correct  in  saying  a  majority  of  the  organized  fanners — the 
-gentlemen  there  know.  Is  that  correct,  that  a  majority  of  the 
organized  farmers  of  America  are  in  favor  of  Government  owner- 
ship and  operation  under  a  democratic  method  of  the  ships  that  we 
liave  constructed  ?  Am  I  confirmed  in  that  opinion  ? 

Mr.  HAMPTON.  Yes. 

Mr.  MARSH.  Clearly  in  the  majority. 

Mr.  HURLEY.  That  is  all  right,  then. 

Mr.  MARSH.  Of  course,  the  farmers  are  going  to  let  the  Congress 
know  what  they  think  about  this. 

Mr.  HURLEY.  Congress  will  be  glad  to  hear  from  the  farmers. 

Mr.  WILLIAM  H.  KNOX,  of  the  National  Foreign  Trade  Council. 
Might  I  be  permitted  to  ask  Mr.  Marsh  a  question  ? 

Mr.  HURLEY.  Certainly,  if  Mr.  Marsh  is  willing. 

Mr.  KNOX.  As  I  understand  your  contention,  Mr.  Marsh,  you 
speak  for  Government  ownership  and  control  and  operation,  and 
you  base  your  argument  on  the  fact  that  Government  administration 
of  our  railway  problem  has  proven  so  efficient  and  that  the  increases 
in  rates  have  been  so  inadequate  with  the  cost  of  operation,  and 
that  operation  has  resulted  in  a  deficit  of  $500,000,000  in  14  months. 
What  is  your  remedy  for  the  deficit  that  should  reasonably  be  ex- 


17 

pected  to  occur  on  similar  lines  of  operation  by  the  Government 
of  American  owned  tonnage,  handling  overseas  commerce  all  over 
the  world? 

Mr.  MARSH.  In  the  first  place,  I  would  have  to  concede  the  first 
part  of  your  understanding  of  my  statement,  my  argument,  which  is 
not  correct.  If  I  may  correct  that,  I  will  answer  your  question  as 
to  the  way  the  majority  felt,  supposing  there  was  a  deficit  how  would 
it  be  met  ?  We  do  not  argue,  Mr.  Knox,  for  Government  operation 
and  ownership  of  the  merchant  marine  on  the  ground  of  the  success 
of  the  railroad's  operation  by  the  Government,  because  let  me  point 
out  to  you — I  thought  I  did — the  Government  went  in  with  its  hands 
tied  and  at  the  most  difficult  time  in  the  world's  history  to  make 
an  experiment  in  Government  operation.  Now  we  can  say  that  when 
all  the  railroads  were  throwing  up  their  hands  and  proving  the  thing 
by  that  most  powerful  of  all  arguments,  action — which  is  louder 
than  words — that  they  had  fallen  down  on  the  job,  the  Government 
came  in  and  they  guaranteed  them  the  same  dividends  which  they 
had  averaged  three  years  previously — the  highest  in  their  record. 
We  had  to  meet  that,  including  at  least  half  a  billion  dollars  of  un- 
earned dividends — $400,000,000  of  unfair  capitalization,  watered 
stock,  increase  in  the  value  of  the  land  owned  by  the  railroads  and 
so  forth.  We  were  handicapped  and  tied  up ;  we  went  in  and  we  had 
to  put  on  400,000  additional  men  on  the  railroads,  because  a  lot  of 
them  had  left  to  help  win  the  war,  and  we  increased  the  salaries,  the 
pay  roll  tremendously— hundreds  of  millions — hundreds  upon  hun- 
dreds— and  then  we  had  congestion  and  a  terrible  condition  which 
tied  up  things;  and  in  the  face  of  all  that  we  broke  nearly  even,  a 
monument  of  the  efficiency  of  what  can  be  done  with  Government 
ownership  of  railroads.  But  of  course  there  was  a  deficit.  Now  what 
deficit  would  there  have  been  under  private  ownership — ^private 
operation  of  the  railroads — if  we  take  the  statement  of  the  railroad 
men  themselves  it  would  have  put  them  into  the  receiver's  hands. 
That  is  on  record. 

Fortunately,  in  the  case  of  the  merchant  marine,  the  ships  con- 
structed by  the  Government  to-day,  we  have  a  fairly  clean  slate  with 
them  to  start  with.  You  gentlemen — I  don't  say,  "  you  gentlemen,*' 
meaning  shipping  interests  alone.  Of  course,  you  represent  many 
interests  here.  The  shipping  interests  have  demanded  that  the  cost  of 
construction  be  written  down  before  you  touch  the  proposition.  All 
right,  then  you  can't  object  to  the  Government  writing  it  down  so 
it  can  start  into  the  proposition  as  a  commercial  proposition.  But 
we  say  this — and  I  am  glad  that  Mr.  Eosseter  called  my  attention 
to  my  misunderstanding  of  this  paragraph — I  did  not  intend  to  do 
so — but,  gentlemen,  it  is  not  a  question  whether  that  is  $500,000,000, 
$200,000,000  or  $250,000,000;  it  is  a  question  of  principle  involved. 
The  farmers  think  these  ships  should  be  operated  not  to  make  profits 
for  anybody,  but  for  service  to  the  whole  American  people ;  and  they 
feel  much  safer  that  they  will  get  low  rates  and  there  will  be  no  dis- 
crimination under  Government  ownership  and  operation  than  under 
private  operation.  And  don't  forget  that  under  private  operation  of 
the  Post  Office  we  paid  25  cents  to  carry  a  letter  and  now  it  is  2  cents. 
Did  any  private  industry  ever  show  a  similar  efficiency  in  reduction 
of  charges? 

121034—19 2 


18 

I  am  very  much  obliged  to  you.  I  am  very  hopeful  that  you  will 
call  on  some  of  these  other  gentlemen  later. 

Mr.  HURLEY.  Can  you  suggest  any  particular  ones? 

Mr.  MARSH.  They  will  take  part  in  the  discussion  later. 

Mr.  HURLEY.  Congressman  Sinclair? 

Congressman  SINCLAIR.  I  have  nothing  to  add  to  Mr.  Marsh's 
statement. 

Mr.  MARSH.  Did  I  represent  Gov.  Frazier  of  North  Dakota  fairly  ? 

Congressman  SINCLAIR.  Fairly  well. 

Mr.  HAMPTON,  of  the  Farmers'  National  Council.  Mr.  Chairman, 
I  am  the  managing  director  of  the  Farmers'  National  Council,  for 
which  Mr.  Marsh  has  been  testifying.  Mr.  Marsh  is  director  of  pub- 
licity and  legislation.  He  has  nothing  to  do,  only  incidently,  with 
the  question  of  organization.  That  comes  under  my  administration, 
and  Mr.  Marsh  has  not  been  able  to  present  to  you  gentlemen  with 
sufficient  force  the  real  policy  of  the  union  of  the  organized  farmers 
of  America  represented  in  this  country. 

It  is  my  business  to  know  exactly  what  the  organized  farmers  or 
the  influence  upon  farmers  amounts  to  in  every  State  in  the  Union. 
Unless  I  could  give  to  my  people  some  reasonable  evidence  that  I 
was  competent  to  give  that  information,  I  would  not  remain  their 
managing  director. 

The  Farmers'  National  Council  has  exactly  in  round  figures — those 
who  actually  subscribe  to  their  reconstruction  program — and  you 
want  to  understand,  distinctly,  that  the  Farmers'  National  Council 
has  nothing  to  do  with  the  general  problems  of  the  farm  organiza- 
tions; its  specific  duty  is  to  organize  and  unite  them  to  carry  their 
reconstruction  program  into  effect.  We  have  no  authority  beyond 
that.  Now  the  Farmers'  National  Council  among  the  different  farm 
organizations  of  the  United  States,  reaching  clear  to  the  Pacific 
coast,  in  the  South  Atlantic  and  Southern  States,  represents  750,000 
members.  It  has  been  my  duty  since  it  was  organized  to  reach  out 
and  present  our  facts  to  other  farm  organizations,  and  among  those 
organizations  I  can  only  briefly  mention  a  few  to  show  how  this  thing 
is  extending.  You  can  take  the  biggest  of  the  farm  organizations  of 
the  State  of  Minnesota,  the  Federation  of  Farmers;  I  have  within 
the  last  two  weeks— three  weeks — had  their  formal  declaration  in  sup- 
port of  the  program  of  the  Farmers'  National  Conference.  That  is 
true  of  a  number  of  the  farmers'  unions  that  have  not  participated 
in  the  original  conference. 

And  furthermore,  it  is  my  duty  as  the  managing  director  and  in 
charge  of  organization  to  see  that  where  we  do  not  get  an  organized 
support,  it  is  my  duty  to  go  into  every  congressional  district  of  the 
United  States  and  find,  either  among  the  farm  organizations,  or 
among  the  unorganized  farmers,  people  who  will  cooperate  with  us, 
so  as  to  make  our  work  effective  when  we  bring  the  united  power  of 
these  farm  organizations  to  bear  upon  the  United  States  Congress. 
And  I  do  not  hesitate  to  say  to  you  gentlemen — without  having  all 
the  facts  at  my  hands — that  we  have  at  least  among  the  unorganized 
farmers  150,000  men  of  high  grade  among  the  farmers,  strategically 
scattered  through  the  unorganized  districts,  associated  with  these  or- 
ganized farmers.  And  I  do  not  hesitate  to  say  that  it  is  my  positive 
conviction  that  by  the  time  this  thing  is  brought  to  a  head  we  will 


19 

have  over  2,000,000  of  the  organized  and  nonorganized  farmers  sup- 
ported in  the  construction  program  as  relating  to  the  merchant  ma- 
rine that  has  been  presented  to  you  by  Mr.  Marsh. 

I  simply  want  to  bring  that  thing  forward  to  your  attention,  gen- 
tlemen, to  show  that  we  are  very  deeply  concerned  in  this  matter. 

Now  the  farmers'  interest  in  this  question  of  merchant  marine  does 
not  rest  upon  the  broad  general  principles  of  Government  ownership. 
It  is  entirely  disassociated  in  their  minds  from  the  question  of  rail- 
road ownership,  which  will  have  to  be  fought  out  on  its  own  merits, 
or  the  question  of  any  other  principle  of  Government  ownership. 
The  merchant  marine  had  been  a  burning  question  in  the  farm  or- 
ganizations long  before  I  had  anything  to  do  with  them,  and  I 
have  been  in  active  service  in  the  farm  organizations  for  the  best  part 
of  20  years.  It  was,  as  you  gentlemen  know  from  the  previous  con- 
troversy that  they  have  had  over  ship  subsidy — you  know  that  the 
farm  organizations  are  unalterably  opposed  to  ship  subsides  and  have 
gone  to  the  bat  with  the  advocates  of  ship  subsidies  time  and  time 
again,  until  they  absolutely,  the  last  time  ship  subsidy  was  up  in  Con- 
gress in  1907,  if  my  memory  is  rights— they  absolutely  defeated  the 
passage  of  the  ship-subsidy  bill  through  the  United  States  Congress. 

Now.  they  do  not  want  to  be  placed  before  the  merchants  and  man- 
ufacturers of  this  country  as  merely  wild-eyed  obstructionists;  they 
claim  to  be  thoughtful  constructionists.  They  have  made  it  per- 
fectly clear,  year  after  year,  that  they  are  deeply  interested  in  seeing 
the  American  merchant  marine  built  up  and  made  the  greatest  mer- 
chant marine  in  the  world.  They  are  very  desirous  of  seeing  the  com- 
merce of  the  United  States  made  the  greatest  commerce  in  the  world, 
and  they  have  given  thoughtful  consideration  to  the  problems  that 
are  involved.  Every  manufacturer  in  the  United  States,  as  well  as 
every  farmer  and  every  merchant  who  is  engaged  or  interested  in 
export  business,  knows"  that  we  must,  to  be  able  to  command  the 
markets  of  the  world,  and  be  able  to  lay  down  our  manufactured 
products,  or  any  other  products,  at  a  less  cost  than  our  foreign  com- 
petitors: and  therefore,  after  you  have  placed  your  goods  f.  o.  b.  on 
the  platforms  for  export  from  your  factories  you  have  got  to  con- 
sider that  you  must  have  a  lower  transportation  charge — both  ocean 
and  land  transportation — and  that  middle  ground  that  is  so  subtle, 
the  terminal  question — cheaper  and  less  costly  than  any  of  your  com- 
petitors. And  we  are  considering  these  things.  We  have  been  taking 
into  consideration  the  question  of  terminal  charges.  We  have  been 
taking  into  consideration  the  question  of  the  ocean  freight  rates  and 
the  conditions ;  and  if  for  no  other  reason,  Mr.  Chairman,  and  gen- 
tlemen, the  farmers  were  unalterably  opposed  to  private  ownership 
and  operation  of  our  merchant  marine,  under  these  circumstances, 
they  would  be  utterly  and  bitterly  opposed  until  you  had  established 
the  regulation  of  ocean  freight  rates,  as  they  affect  the  staples  of  ag- 
riculture. It  must  be  that  every  one  of  you  gentlemen — certainly  the 
Members  of  the  Senate  and  the^United  States  Congress  who  are  here, 
who  have  served  two  or  three  Congresses — know  that  back,  I  believe 
it  was  in  1916,  we  had  a  controversy  in  Congress  over  House  joint 
resolution  311,  providing  for  an  international  conference  on  the  ocean 
freight  rates,  and  the  reason  the  farmers  were  behind  that  was  that 
they  knew  by  the  unregulated  condition  of  the  ocean  freight  rates  on 


20 

the  staples  of  agriculture  they  were  being  milked  of  their  profits  by 
the  manipulations  on  the  grain  exchange;  and  until  you  have  got 
that  question  of  ocean  freight  rates  regulated  on  the  staples  of  agri- 
culture, you  are  up  against  an  impossible  proposition  in  getting  the 
support  of  the  farmers  even  if  they  can  see  some  advantage  to  the 
Nation  in  it. 

Mr.  HURLEY.  Mr.  Hampton,  just  on  that  last  remark  that  you 
made — if  the  freight  rate  question  was  settled,  would  you  be  in  favor 
of  private  ownership  ?  I  mean,  if  there  was  a  fair,  equitable,  and  just 
freight  rate  would  you  then  be  in  favor  of  private  ownership  ? 

Mr.  HAMPTON.  No ;  I  do  not  believe  I  would.  But  I  mean  to  say, 
speaking  in  my  official  capacity  and  not  undertaking  to  speak  for  the 
farmers  on  the  point  of  that  question;  the  point  of  that  question  is 
that  you  must  adjust  the  ocean  freight  rates  on  the  staples  of  agri- 
culture if  you  expect  to  get  the  support  of  the  farmers  of  the  United 
States  on  any  question  of  returning  your  ships  to  private  operation. 

Mr.  HURLEY.  Well,  granted ;  but  I  say  if  that  was  adjusted.  What 
I  am  trying  to  find  out — 

Mr.  HAMPTON  (interposing).  There  are  so  many  other  principles 
that  I  was  not  taking  up  your  time  with  that  now. 

Mr.  HURLEF.  I  wanted  to  get  your  thought  on  that  thing.  If  the 
farmers  of  the  country  were  satisfied  that  the  freight  rates  could  be 
adjusted  and  made  equitable  and  fair — that  is  about  the  main  ob- 
jection they  have  to  private  ownership,  isn't  it? 

Mr.  HAMPTON.  No.  This  is  the  question  as  I  see  it,  the  funda- 
mental question ;  that  all  the  evidence  as  presented  by  the  advocates 
of  the  merchant  marine  until  we  entered  this  war  was  based  upon  the 
theory  that  we  could  not  operate  a  merchant  marine  without  ship 
subsidies  and  the  old  argument,  which  I  have  taken  pains  to  go  into 
again  and  again,  is  that  we  were  fearfully  handicapped  in  operating 
our  merchant  marine  against  the  United  Kingdom,  as  the  principal 
one,  until  we -had  a  ship  subsidy.  I  believe,  myself,  considering  all  I 
have  reviewed,  that  unless  we  do  have  Government  operation  and 
ownership  and  continue  along  the  same  lines  we  have  begun,  we  will 
find  that  we  will  be  crowded  gradually  off  the  seas  by  the  United 
Kingdom. 

Mr.  HURLEY.  What  other  gentlemen  can  we  hear  from  in  favor  of 
Government  ownership;  glad  to  hear  from  anyone.  We  would  like 
to  have  all  the  men  that  are  here  in  favor  of  the  Government  owner- 
ship discuss  it  this  morning.  We  would  be  glad  to  have  them  speak 
later,  but  we  want  to  cover  that  as  part  of  our  program. 

Mr.  MARSH.  May  I  ask  will  there  not  be  an  opportunity  for  us  to 
ask  questions  and  perhaps  engage  in  a  rebuttal  later  ? 

Mr.  HURLEY.  Oh,  yes ;  an  open  meeting. 

Is  there  any  gentleman  here  in  favor  of  Government  ownership 
and  operation  for  the  benefit  of  the  Government  through  the  medium 
of  a  private  corporation?  (No  response.) 

Government  ownership  and  private  operation  for  Government 
account?  Any  advocates  of  that  plan  here?  (No  response.) 

Government  ownership  and  private  operation  for  private  account? 
(No  response.) 

Private  ownership  and  private  operation?  (No  response.)  I 
understand  the  Atlantic  Coast  Shipbuilders'  Association  had  some 


21 

suggestions  to  make  of  this  new  plan.  I  would  be  glad  to  hear  from 
Mr.  Powell. 

Mr.  JOSEPH  POWELL  (Atlantic  Coast  Shipbuilding  Association), 
Mr.  Chairman  and  gentlemen,  I  really  did  not  come  down  to-day 
expecting  to  present  a  concrete  plan  to  a  meeting  of  this  magnitude- 
It  was  our  understanding  that  the  meeting  to-day  was  informal  in 
character  and  very  much  smaller  in  numbers.  The  Atlantic  Coast 
Shipbuilders-  Association  has  given,  naturally,  a  good  deal  of  con- 
sideration to  what  was  to  become  of  this  enormous  fleet  that  has 
been  built  for  and  at  the  expense  of  the  United  States  to  meet  con- 
ditions arising  out  of  the  war.  We  are  interested  personally  from 
a  business  standpoint  because  the  disposition  of  this  fleet  is  sure  to 
react  upon  our  own  business.  We  can  not  claim  in  shipbuilding  as 
many  members,  as  many  voters  as  some  of  the  other  organizations^ 
but  shipbuilding  has  grown  from  a  small  and  very  weak  industry 
before  the  war  to  a  very  large  one  that  is  represented  in  practically 
every  seaport  State  of  the  United  States.  The  Atlantic  Coast  Ship- 
builders' Association  speaks  only  for  those  shipyards  from  Maine  to 
the  Gulf  of  Mexico,  other  organizations  will  undoubtedly  present 
men  competent  to  speak  for  the  rest  of  the  industry. 

Some  two  months  ago  I  listened  with  great  interest  to  Mr.  Hur- 
ley's speech  made  in  New  York,  giving  his  views  of  the  disposition 
of  this  enormous  American  fleet.  There  seems  to  be  a  great  deal 
in  that  address  that  appealed  strongly  to  the  shipbuilders,  and  I  be- 
lieve to  the  shipping  men,  but  it  did  not  seem  to  me  that  it  went 
far  enough  to  cover  the  whole  situation;  primarily,  because  I  do* 
not  believe  there  is  in  the  United  States  to-day  sufficient  capital 
ready  to  go  into  shipowning  to  absorb  the  enormous  tonnage  built 
and  building  for  the  United  States.  In  order  to  meet  that  difficulty 
it  was  deemed  necessary  to  find  some  other  way  of  disposing  of  the 
balance  of  the  tonnage  and  very  naturally  the  method. that  occurred 
to  us  and  that  appealed  to  us  was  the  method  of  leasing  such  ships- 
as  could  not  be  sold. 

There  is  a  third  very  important  factor  in  the  situation,  and  that 
is:  For  reasons  which  we  perfectly  well  understand,  many  ships 
have  been  built  which  are  not  suitable  for  the  permanent  commerce  of 
the  United  States.  The  general  proposal  which  we  have  had  in  mind 
is  based  immediately  upon  the  idea  of  private  operation  of  the 
American  merchant  marine  under  the  least  Government  control  es- 
sential to  insure  its  performing  the  function  which  should  be  per- 
formed in  handling  our  great  commerce;  the  general  idea  that  we 
had  is :  First,  that  no  ship  should  be  sold  for  a  certain  period  while? 
readjustment  is  going  on.  Second,  that  there  should  be  selected 
from  all  of  the  ships  owned  by  the  United  States  Government  those 
which  are  not  suitable  for  the  commerce  of  the  country  and  that 
after  a  period  of  two  years,  say,  these  ships  should  be  disposed  of 
wherever  they  can  be  sold  to  the  best  advantage.  Third,  that 
Mr.  Hurley's  scheme,  as  he  has  expounded  it,  should  be  writ- 
ten into  the  law  for  the  sale  of  so  many  of  the  balance  of  the  ships 
as  can  be  disposed  of  to  private  ownership,  practically  as  Mr.  Hur- 
ley has  outlined  in  his  proposition.  Fourth,  that  the  balance  of  the 
ships  should  be  offered  for  lease  to  private  owners  on  a  very  mod- 


22 

erate  leasing  fee,  say  4  per  cent  of  the  estimated  value  of  the  ship, 
with  an  arrangement  by  which  the  Government  would  share  equally 
with  the  lessor  in  any  profits  in  excess  of  8  per  cent  on  the  actual 
capital  invested  by  the  operator.  Of  course,  there  are  great  many 
other  angles  to  this  general  situation.  Mr.  Hurley  has  proposed  a 
merchant  marine  development  fund  and  an  American  insurance  com- 
pany, Government  operated.  It  seems  to  me  that  those  two  propo- 
sitions must  be  an  integral  part  of  any  scheme  that  will  result  in 
any  permanently  profitable  and  useful  American  merchant  marine. 
We  have  proposed  to  put  into  that  marine-development  fund  a  por- 
tion of  the  money  saved  from  the  leasing,  and  to  give  the  Shipping 
Board  extremely  wide  latitude  in  using  those  funds  for  building  up 
the  weak  lines,  for  taking  care  of  new  lines  during  their  development 
stages,  for  use  in  putting  on  fitting  ships  in  lines  where  foreign  com- 
petition needs  such  methods,  and,  in  general,  to  use  this  fund  which 
would  be  a  large  one,  for  insuring  the  stability  of  the  American 
merchant  marine  and  preventing  the  result  that  one  of  the  experts 
has  stated  as  a  possible  danger,  and  that  is,  that  we  would  get  an 
enormous  merchant  marine  which  would  gradually  dry  up  in  com- 
petition with  the  lines  of  foreign  governments. 

There  are  a  good  many  other  minor  angles  to  the  situation.  Tho 
enlistment  of  the  force  operating  these  ships  in  a  Naval  Reserve  and 
the  assumption  by  the  Government  of  the  difference  in  their  wages 
between  the  wages  paid  by  American  lines  and  those  of  the  principal 
foreign  competitor  seems  a  fair  and  reasonable  method  for  the  Navy 
Department,  for  the  Navy  it  is  highly  necessary  to  obtain  a  splendid 
reserve  that  would  be  of  inestimable  value  in. time  of  war  and  also 
remove  of  the  great  reasons  why  American  ships  have  not  been  able 
to  compete  in  the  past. 

Mr.  Hurley's  suggestion  this  morning  of  cadets  to  be  trained  to 
properly  man. ships  is  an  excellent  one.  In  general,  the  scheme  I 
have  outlined  is  only  a  bare  skeleton  of  what  seems  to  us  a  method 
necessary  to  put  back  into  private  operation,  under  reasonable  Gov- 
ernment control,  the  large  number  of  ships  built  and  building  which 
will  insure  to  the  United  States  the  sort  of  an  overseas  commerce 
which  every  red-blooded  American  to-day  wants  to  see  and  which 
I  thoroughly  believe  the  country  is  going  ito  have. 

The  reason  the  shipbuilders  believe  in  private  ownership  rather 
than  in  Government  ownership  is  based  solely  on  efficiency.  If  any 
private  owners  can  not  make  all  the  profit  that  he  wants  and  still 
beat  the  cost  of  doing  business  under  Government  ownership  why  he 
don't  deserve  to  be  in  business  at  all. 

Now,  that  briefly  sums  up  our  position.  I  have  not  presented  my 
remarks  in  the  form  I  would  like  to  have  done,  but  if  anyone  would 
like  to  ask  any  questions,  I  would  be  glad  to  answer  them. 

Mr.  EVANS.  Mr.  Chairman,  Mr.  Powell  has  drawn  the  remarks  he 
has,  to  make  up  in  a  very  rough  draft  which  is  not  perfect  by  any 
means  and  which  is  open,  undoubtedly,  to  criticism  on  small  points, 
but  I  think  it  would  be  well,  Mr.  Powell,  to  submit  that  and  read  it 
because  I  think  that  it  gives  something  absolutely  concrete  and  I 
think  with  the  explanation  that  that  isn't  final  by  any  means,  it  would 
be  well  to  read  that  and  read  it  into  the  records : 


23 

A  BILL  Relative   to   sale  and   lease   of  vessels   by   the   United    States    Shipping   Board. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States 
of  America  in  Congress  assembled:  That  the  United  States  Shipping  Board  is 
authorized  to  sell  any  vessels  built  or  acquired  by  the  said  board  acting  under 
authority  of  the  emergency  act  of  June  15,  1917,  which  said  board  may  find 
after  due  investigation  not  adapted  to  overseas  commerce  either  because  of  the 
nature  of  the  materials  from  which  they  have  been  constructed  or  because  of 
the  design  or  because  they  are  of  insufficient  size  or  tonnage.  Any  such  vessels 
may  be  sold  after  public  advertisement  in  the  discretion  of  the  Shipping  Board 
without  restriction  as  to  flag,  registry  or  enrollment. 

SEC.  2.  No  vessels  built  or  acquired  by  the  said  board  shall  be  sold  except 
under  the  provisions  of  the  preceding  section  during  the  period  of  two  years 
from  the  date  of  the  passage  of,  this  act. 

SEC.  3.  Two  years  from  date  of  passage  of  this  act,  the  United  States  Ship- 
ping Board  is  authorized  to  sell  any  vessel  built  or  acquired  by  the  said  board 
acting  under  authority  of  the  emergency  act  of  June  15,  1917,  to  an  American 
citizen  or  to  companies,  the  officers  and  managers  of  which  are  all  American 
citizens  in  accordance  with  provisions  of  section  18  of  the  act  approved  Septem- 
ber 7,  1916.  Ships  to  be  sold  after  advertisement  and  at  a  price  which  in  the 
discretion  of  the  United  States  Shipping  Board  represents  a  fair  price  in  the 
current  world  market  for  similar  tonnage  at  the  date  of  sale. 

SEC.  4.  Twenty-five  per  cent  of  the  purchase  price  of  each  ship  will  be  paid 
in  cash,  the  balance  to  be  payable  in  annual  installments  over  a  period  not 
exceeding  10  years  and  to  be  secured  by  a  mortgage  for  the  unpaid  balance 
bearing  interest  at  the  rate  of  5  per  cent. 

SEC.  5.  The  purchaser  shall  be  required  to  insure  and  keep  insured  with  an 
American  insurance  company  his  equity  in  the  vessel  and  shall  place  additional 
insurance  as  the  United  States  Shipping  Board  may  direct  to  cover  the  Gov- 
ernment's equity  in  the  vessel. 

SEC.  6.  Transfer  of  vessel  to  foreign  registry  or  to  individuals  who  are  not 
American  citizens  or  companies,  the  officers  and  managers  of  which  are  not 
American  citizens,  is  expressly  prohibited. 

SEC.  7.  All  other  vessels  built  or  acquired  by  the  said  board  as  they  cease  to 
be  required  for  direct  operations  of  the  Government  of  the  United  States  may 
be  leased  to  citizens  of  the  United  States  or  to  corporations  organized  under  the 
laws  of  any  State  of  the  United  States  for  private  operation  under  United  States 
registry  or  enrollment. 

SEC.  8.  Before  a  lease  of  any  vessel  shall  be  made,  satisfactory  evidence  shall 
be  furnished  to  the  said  board  that  the  trade  in  which  such  vessel  is  to  be  used 
is  in  the  interest  of  the  commerce  of  the  United  States  and  that  the  lessee  is 
able  to  furnish  sufficient  capital  for  the  enterprise. 

SEC.  9.  Before  leasing  a  vessel  the  said  board  shall  cause  such  vessel  to  be 
appraised.  All  leases  shall  be  for  the  term  of  10  years  and  for  the  first  five 
years  the  rental  shall  be  4  per  cent  per  annum  of  the  appraised  value  of  the 
vessel  payable  semiannually.  At  the  end  of  five  years  said  board  shall  cause 
such  vessel  to  be  reappraised  and  the  rental  for  the  remaining  five  years  shall 
be  5  per  cent  per  annum  of  such  second  appraisal  payable  semiannually.  Every 
lease  shall  contain  a  provision  that  at  the  end  of  each  year  of  operation  said 
board  shall  require  and  establish  an  audit  and  that  the  lessee  shall  pay  the  said 
board  one-half  of  the  net  profits  from  operation  of  the  vessel,  the  lessee  first 
deducting  interest  at  the  rate  of  8  per  cent  on  the  amount  of  capital  found  by 
the  said  board  to  have  been  actually  invested  by  the  lessee  in  the  form  of 
working  capital  or  otherwise  for  the  operation  of  the  vessel.  No  deduction 
shall  be  made  for  depreciation. 

SEC.  10.  At  any  time  after  three  years  from  the  date  of  any  such  lease  the 
lessee  may  call  upon  the  said  board  to  cause  a  new  appraisal  of  such  vessel  to 
be  made  and  such  lessee  shall  have  the  option  of  purchasing  such  vessel  at 
such  appraised  value.  In  the  event  of  such  purchase  there  shall  be  credited 
toward  the  purchase  price  any  earnings  which  the  said  board  may  have  received 
as  its  share  of  the  profits  under  the  provisions  of  the  preceding  section,  first 
deducting  from  such  earnings  which  said  board  may  have  so  received  an  amount 
equivalent  to  5  per  cent  per  annum  on  the  first  appraisal  of  such  vessel  as  a 
charge  for  depreciation. 

SEC.  11.  All  such  leases  shall  contain  covenants  that  the  lessee  shall  maintain 
the  vessels  in  a  good  state  of  repair,  and  such  other  covenants  and  provisions 


24 

as  the  said  board  may  consider  desirable  and  necessary  to  protect  the  interest 
of  the  lessor,  and  shall  provide  that  the  lease  may  be  canceled  by  the  board  for 
breach  of  any  covenant  or  if  in  its  opinion  a  vessel  shall  be  operated  at  any 
time  in  a  manner  prejudicial  to  the  commerce  of  the  United  States. 

SEC.  12.  After  one  year  the  lessee  of  any  such  vessel  shall  have  the  right  to 
return  the  vessel  to  the  said  board  by  giving  six  months'  notice  of  intention, 
if  in  the  judgment  of  the  lessee  such  vessel  can  not  be  operated  without  a  loss, 
provided  such  vessel  is  returned  in  as  good  condition  as  upon  its  delivery  to 
such  lessee,  reasonable  depreciation  from  wear  and  tear  only  excepted.  The 
lease  of  such  vessel  shall  thereupon  be  canceled. 

SEC.  13.  The  said  board  shall  cause  to  be  made  an  annual  survey  and  inspec- 
tion of  each  leased  vessel.  Such  vessels  shall  be  insured  for  the  benefit  of  the 
lessor,  and  said  board  is  authorized  in  its  discretion  to  conduct  an  insurance 
department  for  writing  insurance  on  such  vessels,  charging  a  lessee  rates  not 
in  excess  of  the  usual  rates  for  such  insurance.  If  in  the  judgment  of  said 
board  it  is  necessary  and  desirable  in  the  interest  of  the  United  States  said 
board  may  also  write  insurance  on  cargoes  carried  in  such  vessels. 

SEC.  14.  A  merchant  marine  development  fund  is  hereby  established.  Into 
this  fund  is  to  be  paid  all  interest  received  on  mortgages  on  ships  sold  in 
accordance  with  section  No.  4  in  excess  of  4  per  cent  per  annum.  Into  this 
fund  is  to  be  paid  all  earnings  from  insurance  premiums  collected  by  the 
Government  on  insurance  written  by  the  Government  covering  marine  risks  on 
hulls  or  cargoes  insured  by  direction  of  the  United  States  Shipping  Board  as 
herein  provided.  Into  this  fund  will  be  paid  all  receipts  on  leased  vessels  in 
excess  of  8  per  cent  of  the  appraised  value  of  said  vessel. 

SEC.  15.  The  United  States  Shipping  Board  is  hereby  authorized  to  administer 
the  merchant  marine  development  fund  for  the  following  purposes : 

1.  To  provide  for  the  establishment  of  regular  lines  of  vessels  on  trade  routes 
that  may  not  at  first  prove  self-sustaining  or  that  may  be  required  for  the  proper 
development  of  the  commerce  of  the  United  States,  sufficient  sums  may  be  paid 
to  lessees  of  vessels  to  warrant  their  operation  in  lines  as  directed  by  the  United 
States  Shipping  Board.    Such  payments  shall  continue  only  until  such  time  and 
shall  only  be  in  such  amounts  as  will  yield  a  reasonable  return  to  the  lessees. 

2.  To  cover  the  operation  by  the  United  States  Shipping  Board  of  vessels  not 
leased  or  soid  in  unremunerative  trades  or  for  competitive  purposes  against 
foreign  lines  that  may  endeavor  to  force  American  vessels  out  of  certain  for- 
eign business  by  unfair  methods. 

SEC.  16.  For  the  purpose  of  formation  of  an  adequate  Naval  Reserve  all  Ameri- 
can citizens  serving  on  vessels  of  United  States  registry  will  be  enlisted  in  the 
United  States  Naval  Reserve  under  conditions  to  be  laid  dowrn  by  the  Secretary 
of  the  Navy.  In  return  for  such  services  the  Government  will  pay  such  part  of 
the  wages  of  such  Naval  Reserves  as  is  in  excess  of  the  average  pay  of  the 
officers  or  man  in  similar  rating  in  the  principal  foreign  competing  steamship 
line,  the  rates  of  pay  in  the  American  vessels  and  the  amount  of  such  payments 
to  be  agreed  upon  between  the  Secretary  of  the  Navy  and  the  United  States 
Shipping  Board. 

Mr.  MARSH.  If  I  understand  your  proposal,  it  is  sort  of  a  Gov- 
ernment guarantee? 

Mr.  POWELL.  No,  sir;  there  isn't  any  guarantee  about  it. 

Mr.  MARSH.  Underwriting — 

Mr.  POWELL  (interposing).  No;  not  even  any  underwriting,  except 
that  it  may  be  necessary  to  start  up,  to  let  a  weak  line  get  on  its  feet. 

Mr.  MARSH.  But  you  say  there  isn't  enough  private  capital  to  take 
over  the  ships.  Then  you  must  have  Government  credit  for  a  private 
corporation  to  make  money,  which  most  IjState  constitutions  prohibit. 
Even  if  they  didn't,  that  constitution  could  be  amended — it  seems  to 
us  that  if  the  Government  is  going  to  lend  its  credit  in  this  way  to 
enable  corporations  to  make  large  sums  of  money,  we  are  starting  a 
very  dangerous  precedent.  We  tried  it  with  the  railroads  and  gave 
them  155,000,000  acres  and  three-quarters  of  a  million  subsidy,  with 
an  idea  of  reducing  rates,  and  they  have  raised  them  every  since. 


25 

Mr.  POWELL.  I  believe  in  people  making  money.  That  is  the  in- 
centive that  has  made  America  a  great  country.  And  if  I  can  not 
make  money  here,  I  want  to  go  somewhere  else  to  live.  [Applause.] 

Mr.  MARSH.  Do  you  think  I  disagree  with  that?  I  am  sorry  you 
had  to  avoid  my  question  by  making  a  statement  of  a  principle  that 
I  entirely  agree  with.  That  is,  if  you  go  out  into  the  open  market 
you  come  out  all  right,  but  you  are  suggesting  that  with  the  break- 
ing down  of  private  efficient  capitalists'  methods  you  can  not  get  the 
money  to  construct  these  ships  which  have  now  been  constructed,  and 
you  come  on  your  knees  to  the  Government  and  say,  "  We  want  to 
make  money ;  for  God  sake  give  us  a  start."  That  is  what  it  resolvss 
itself  into. 

Mr.  POWELL.  If  a  farmer  came  to  the  Government  and  said.  "  I 
would  like  you  to  reclaim  5,000  acres  of  land  and  it  is  going  to  cost 
so  much  money,  and  when  you  have  reclaimed  it,  I  will  pay  you  4 
per  cent  on  the  cost  of  reclaiming  that  land,  and  then  I  will  share 
with  you  after  you  get  8  per  cent  of  the  money  you  invest;  I  will 
share  with  you  50  per  cent  on  what  you  make."  I  shouldn't  think  the 
Government  Avas  doing  anything  that  wasn't  a  mighty  good  business 
proposition.  That  is  the  proposition  that  we  are  putting  forward 
toward  the  leasing  of  these  steamships  and  it  doesn't  sound  to  me  as 
if  the  Government  is  lending  the  fellow  that  takes  the  ships  any 
credit  or  doing  anything  that  isn't  a  good  sound  business  proposition. 

Mr.  MARSH.  If  the  Government  did  that,  and  shared  with  the 
farmer,  they  would  have  to  take  deficits  with  the  farmer.  You  do 
admit  you  want  to  make  all  you  can  out  of  it? 

Mr.  POWELL.  I  didn't  say  all  I  can.  I  say  a  man  who  runs  his  busi- 
ness efficiently  should  get  a  suitable  return  for  it. 

Mr.  MARSH.  How  about  the  return  on  the  stock ;  are  the  dividends 
you  earn  due  to  your  efficiency  ? 

Mr.  POWELL.  There  isn't  any  question  of  the  returns  on  the  stock 
in  this  proposition  at  all. 

I  don't  know  how  the  company  will  run,  but  half  of  what  they 
make  over  8  per  cent  of  the  exact  money  that  they  invest  goes  back 
to  the  Government.  They  pay  4  per  cent,  the  assessed  value  of  the 
property,  and  they  have  left  to  divide  up  the  other  half  of  their 
earnings  over  a  per  cent  on  their  financial  investments.  If  they  can 
make  good  earnings  they  will  have  enough  interest  to  pay  on  a  good 
deal  of  stock;  if  they  can  not  make  good  earnings,  they  won't. 
How  such  a  company  would  be  capitalized  doesn't  enter  into  the 
question  of  discussion  at  all. 

Mr.  MARSH.  The  packers  told  us  they  were  making  such  a  little 
tiny  bit,  but  when  the  Federal  Trade  Commission  got  the  facts,  it 
averaged  54  per  cent  instead  of  8  or  9  per  cent.  Can  you  get 
capital  to-day  at  4  per  cent  in  private  operations  ? 

Mr.  POWELL.  No. 

Mr.  MARSH.  Then  the  Government  is  subsidizing  to  the  difference 
between  4  per  cent  and  the  money  you  can  get  private  capital  for. 

Mr.  POWELL.  I  am  not  arguing  with  you  on  that.  What  you  have 
got  to  do  is  make  a  lease  on  your  terms  so  that  the  man  that  takes  the 
ship  can  make  money  on  it,  because  if  you  don't  he  won't  take  it. 
What  you  are  getting  in  return  is  the  greater  efficiency  of  private 


26 

operations  that  will  carry  farmers'  goods  to  foreign  markets  far 
cheaper  than  under  Government  operation. 

Mr.  MARSH.  You  can't  say  that;  you  have  never  tried  it. 

Mr.  POWELL.  That  is  the  only  thing  we  have  tried. 

Mr.  HURLEY.  We  have  to  make  a  little  more  progress ;  we  can  not 
give  vou  all  the  time;  we  want  to  have  more  concrete  questions 
asked. 

Mr.  HAMPTON.  I  would  like  to  ask — I  understand  you  will  agree 
that  the  exporters  of  the  United  States  are  divided  into  two  classes ; 
those  exporting  finished  products  and  those  exporting  raw  materials. 
You  agree  that  is  a  fair  classification  ? 

Mr.  POWELL.  Yes. 

Mr.  HAMPTON.  Now,  the  majority  of  advocates  of  such  a  prin- 
ciple for  the  operation  of  ships  constitute  the  exporters  of  finished 
products.  The  farmers  are  in  the  class  of  the  people  who  are  ex- 
porting unfinished  products ;  that  is  true,  is  it  not  ? 

Mr.  POWELL.  I  didn't  just  catch  the  first. 

Mr.  HAMPTON.  I  say  we  divide  the  exporters  sharply  into  two  big 
classes,  exporters  of  finished  products  or  exporters  of  raw  material 
or  unfinished  products.  Now,  the  majority  of  the  supporters  on  your 
proposition  are  the  exporters  of  finished  products. 

Mr.  POWELL.  I  don't  know  that  my  proposition  has  any  supporters. 
This  is  something  that  has  been  put  forward  as  an  idea  for  dis- 
cussion. 

Mr.  HAMPTON.  The  farmers  are  largely  in  the  group  of  the  ex- 
porters of  the  unfinished  products.  That  is  true,  is  it  not? 

Mr.  POWELL.  It  depends — 

Mr.  HAMPTON  (interposing).  If  you  export  manufactured  prod- 
ucts, what  do  you  take  in  return  in  a  great  many  of  the  markets 
you  are  advocating  to  develop  ?  You  intend  to  take  in  return  the  un- 
finished products,  the  farm  products.  You  can  not  do  business  with 
Argentina  and  ship  the  agricultural  implements  and  the  other 
finished  products  to  them  without  taking  as  pay  farm  products. 
There  is  no  escape,  as  I  see  it,  from  that  conclusion.  When  the  farmer 
exports  his  products,  what  is  going  to  be  taken  in  return?  Manu- 
factured products.  No  escape  from  that,  is  there? 

Mr.  POWELL.  I  don't  see  that  that  makes  any  difference  as  to  who 
operates  the  ships. 

Mr.  HAMPTON.  In  regard  to  the  attitude  of  the  farmers  toward 
the  merchant  marine — 

Mr.  POWELL.  You  don't  want  to  bring  back  anything  that  com- 
petes with  the  farmers? 

Mr.  HAMPTON.  Not  at  all.  We  want  equality  of  service  and  we 
want  a  merchant  marine  that  will  absolutely  and  positively  and  un- 
equivocally guarantee  that  equality  of  service  and  as  a  united  Nation 
that  is  "  100  per  cent  American,"  we  want  to  go  shoulder  to  shoulder 
with  the  manufacturers  and  merchants,  to  go  into  the  markets  of  the 
world. 

Mr.  HURLEY.  Any  other  questions  you  would  like  to  ask  Mr. 
Powell? 

Mr.  Hamilton,  of  the.  American  Bankers'  Association.  Do  you  have 
any  matters  to  present,  Mr.  Hamilton?  We  would  be  very  glad  to 
hear  from  you  if  you  will  come  down  this  way. 


27 

Mr.  JOHN  L.  HAMILTON  (representing  the  commerce  and  marine 
committee  of  the  American  Bankers'  Association,  Columbus,  Ohio). 
The  American  Bankers'  Association,  as  you  know,  represents  practi- 
cally all  of  the  banking  interests  of  the  United  States.  That  organi- 
zation has  a  membership  close  to  20,000  in  the  United  States. 

Last  September  the  association,  recognizing  the  importance  of  this 
question,  appointed  a  committee  of  15  to  study  the  values  placed  in 
connection  with  this  problem  and  to  cooperate  with  similar  commit- 
tees appointed  by  other  representative  organizations  of  the  United 
States. 

We  are  not  prepared  to  say  that  any  one  plan  is  the  plan.  We 
recognize  the  different  interests  that  enter  into  this  commerce  ques- 
tion. We  recognize  the  agricultural,  the  mining,  the  manufacturing, 
and  the  labor  interests  in  this  problem;  also  the  transportation  end 
of  it.  We  believe  that  the  only  feasible  way  of  reaching  a  definite 
conclusion  is  by  the  appointment  of  representatives  of  these  different 
organizations,  a  committee  of  two  or  three,  or  four,  or  perhaps  five, 
from  each,  to  get  together  and  discuss  the  various  phases  of  this 
problem. 

The  American  bankers  believe  that  every  industry,  every  line  of 
endeavor,  should  have  a  fair  and  reasonable  profit  for  its  efforts. 
We  have  just  come.  Mr.  Collins  and  I.  from  a  meeting  of  the  ex- 
ecutive council  of  the  American  Bankers'  Association  held  at  White 
Sulphur  Springs  this  week,  at  which  convention,  or  at  which  meet- 
ing, there  were  over  300  bankers  representing  the  different  sections 
of  the  United  States  present. 

At  that  meeting  resolutions  were  offered  and  we  are  here  to  pre- 
sent you  the  draft  of  those  resolutions.  They  were  unanimously 
adopted  by  the  delegates  in  attendance  at  that  convention.  Those 
delegates  represent  every  distinctive  class  and  interest,  it  seems  to 
me.  in  the  United  States.  I  will  ask  Mr.  W.  P.  Collins,  the  secre- 
tary of  our  commitee,  to  read  the  resolutions  that  were  adopted 
at  il}at  convention  at  this  time,  with  your  permission. 

Mr.  HURLEY.  Mr.  Collins. 

Mr.  COLLINS.  This  is  an  extract  from  the  report  adopted  by  the 
committee  on  commerce  and  marine  of  the  American  Bankers' 
Association  at  White  Sulphur  Springs,  W.  Va.,  May  19,  1919,  for 
presentation  to  the  executive  council  of  the  association,  and 
unanimously  adopted  by  the  executive  council,  May  21,  1919: 

The  committee  feels  that  its  influence  may  properly  be  extended  to  the 
development  of  needed  initiative  and  expert  management  with  relation  to 
shipping.  This  initiative  and  management,  with  reasonable  financial  sup- 
port and  safeguards,  can,  in  the  committee's  judgment,  be  found  in  the  working 
out  of  a  merchant-marine  plan  involving  privately  owned  and  operated  vessels. 
with  such  assistance  as  may  be  necessary  to  make  their  operation  successful 
against  all  competition.  With  respect  to  the  merchant-marine  question,  it 
is  the  view  of  the  committee  that  there  must  be  careful,  intelligent,  and  im- 
partial study  of  all  the  apparently  worth- while  plans  presented ;  that  this  study 
must  be  divorced  as  far  as  possible  from  politics,  and  that,  while  a  permanent 
businesslike  method  of  handling  the  merchant  marine  should  be  developed  as 
soon  as  may  be,  there  must  be  realization  that  any  plan  entered  upon  may  be 
in  a  large  sense  experimental. 

Your  committee  is  confident  of  the  opinion  and  recommends  to  the  executive 
council  for  its  approval,  that  Government  ownership  or  Government  operation 
of  our  shipping  is  not  to  the  best  interest  of  our  people.  We  believe  that  the 
Government  should  dispose  of  the  shipping,  which  it  has  accumulated  since  we 


28 

entered  the  war,  and  at  prices  which  will  permit  private  ownership  and  opera- 
tion at  reasonable  profit.  We  further  believe  a  decision  in  regard  to  these  prices 
should  be  reached  after  proper  investigation  and  consideration,  as  early  as 
possible.  We  are  further  confidently  of  the  opinion  that  the  Government 
should  adopt  as  a  definite  policy  that  it  will  in  no  manner  or  form  compete 
with  established  steamship  lines,  as  is  the  case  to-day.  We  believe  that  in  this 
attitude  will  be  found  the  greatest  encouragement  and  the  greatest  stimulus 
for  individual  initiative.  If  the  Government  should  decide  to  dispose  of  its 
shipping  after  first  fixing  a  reasonable  price  thereon,  the  plan  will  probably  call 
for  the  payment  in  cash  by  the  purchaser  of  a  certain  percentage,  possibly  25 
per  cent,  of  the  agreed  price,  the  balance  to  be  paid  in  installments. 

Having  in  mind  this  arrangement,  if  it  be  adopted,  will  call  for  financing  on 
the  part  of  banks,  our  committee  has  appointed  a  special  subcommittee  to  study, 
formulate,  and  recommend  a  safe  and  consistent  plan  of  ship  financing  for  the 
benefit  and  guidance  of  all  concerned. 

The  committee  considers  that  the  question  of  ocean  transportation  is  highly 
important,  but  that  it  is  by  no  means  predominant  and  hopes  that  bankers 
while  giving  it  all  needed  consideration  will  apply  themselves  particularly  to 
distinctly  financial  questions,  of  unquestioned  urgency.  In  this  connection  it 
might  not  be  amiss  to  emphasize  that  there  may  be  disposition  to  consider 
that  the  financing  of  our  shipping  and  foreign  trade  are  particularly  and  dis- 
tinctly matters  calling  for  the  attention  only  of  the  large  banking  institutions 
of  the  country,  but  it  is  believed  by  the  committee  that  one  of  the  lessons  of  the 
war  is  that  the  prices  which  prevail  for  the  products  of  the  farm  and  the  output 
of  our  factories  are  possible  only  as  the  result  of  the  fact  that  such  output 
and  such  products  have  found  foreign  markets.  If  these  markets  be  shut  off 
for  any  reason,  whether  it  be  competition  or  the  lack  of  facility,  a  reflection 
will  be  quickly  found  in  the  prices  of.  commodities  which  we  produce. 

Therefore,  it  is  safe  to  say  that  the  small  banker  as  well  as  the  large  one  will 
come  to  recognize,  if  he  does  not  already  do  so,  that  the  best  interests  of  the 
community  he  serves  will  be  found  in  the  support  which  he  as  well  as  others 
of  his  community  give  to  these  very  important  questions. 

Mr.  JOHN  L.  HAMILTON,  of  the  American  Bankers'  Association.  I 
will  say  in  connection  with  this  that  the  bankers  recognize  the  neces- 
sity of  establishing  some  form  of  suitable  exchange.  This  must  be 
done  by  some  means  that  will  recognize  the  importance  of  importing 
as  well  as  exporting  goods  to  and  from  this  country.  This  is  one  of 
the  chief  difficulties  in  the  way  of  business  to-day ;  the  high  rates  of 
exchange  prevailing  to  foreign  countries  where  they  have  to  procure 
the  American  dollar.  We  believe  that  through  some  kind  of  an 
agency  which  can  be  formulated  out  of  an  organization  of  this  kind, 
when  they  get  together  in  sober  thought,  might  devise  a  plan  which 
will  help  regulate  the  exchange.  We  have  not  only  a  duty  to  per- 
form in  the  United  States,  but  we  have  a  duty  to  the  foreign  powers 
to  perform.  We  have  got  to  see  to  it  that  these  countries  are  built  up 
and  given  an  opportunity  to  build  up  the  same  as  our  institutions  are 
permitted  to  run  on  and  to  continue  to  run  at  a  profit  in  this  country. 

Mr.  HURLEY.  I  would  like  to  hear  from  Mr.  Rush  on  the  insurance 
situation. 

Mr.  BENJAMIN  EUSH,  of  American  Marine  Insurance,  New  York. 
Mr.  Chairman  and  gentlemen :  I  am  like  Mr.  Hale.  I  thought  this 
was  going  to  be  a  very  much  more  informal  meeting  than  it  appears 
to  be,  and  I  thought  it  was  going  to  be  smaller ;  but  on  the  whole  I 
am  glad,  although  I  am  not  prepared  to  talk  to  you,  I  am  glad 
it  is  large  and  as  widely  representative  as  it  seems  to  be,  because 
want  to  put  a  few  thoughts  of  mine  before  you  for  what  they  are 
worth,  and  should  they  reach  the  organizations  I  would  like  them  to 
reach,  so  much  the  better. 

I  am  president  of  the  Association  of  Marine  Underwriters  of  the 
United  States,  which  is  a  formation  of  some  50  American  marine 


29 

insurance  companies,  operating  particularly  in  the  United  States,  and 
also  to  a  considerable  extent  in  foreign  countries.  We  are  therefore 
able  to  take,  perhaps,  a  wider  grasp  than  a  man  whose  business  is 
solely  confined  to  the  United  States.  Personally,  I  represent  the 
oldest  American  marine  company,  which  has  been  in  business  since 
1792.  Our  company  has  watched  the  growth  of  the  American  mer- 
chant marine,  has  watched  it  attain  its  zenith,  with  a  greater  amount 
of  tonnage  on  the  ocean  than  Great  Britain ;  has  watched  its  decline 
and  fall,  and  we  now  hope  we  are  in  a  fair  way  to  watch  its  rebirth 
and  its  assumption  of  its  place  on  the  Atlantic  Ocean,  the  place  to 
which  it  is  justly  entitled. 

Careful  consideration  of  the  reason  for  the  decline  and  fall  of  the 
American  merchant  marine  has  led  me  to  formulate  two  opinions: 
First  and  foremost,  it  declined  because  the  American  citizen  had  a 
vast  continent  opened  up,  and  he  could  get  better  employment  for  his 
money  in  the  development  of  the  West  and  in  the  development  of 
his  manufactures  than  he  could  in  trading  on  the  ocean.  That,  per- 
haps, was  one  of  the  principal  causes.  After  that,  perhaps  the  chief 
contributing  cause  was  that  the  merchant  marine  had  been  used 
very  largely  as  a  grindstone  for  other  people  to  grind  their  axes  on. 
It  was  regarded  as  a  means  of  employing  American  labor  in  ship- 
yards, and  employment  on  the  vessels  that  navigated  the  sea.  It  was 
regarded  as  a  means  for  training  sailors  and  officers  for  the  United 
States  Navy,  but  the  root  idea,  without  which  it  is  impossible  for 
any  merchant  marine  worth  its  name,  in  my  opinion,  was  steadily 
disregarded,  and  that  was  the  profit  to  the  American  shipowner. 

We  are  all,  in  this  country,  bound  up  one  with  the  other.  It  is 
impossible  for  any  one  interest  or  industry  to  claim  a  preeminent 
share  in  the  profits  of  the  commerce  and  business  of  the  United 
States.  The  farmers,  the  merchants,  the  miners,  the  manufacturers, 
all  live  and  prosper  as  a  whole  community  prospers,  and  they  all  fail 
and  die  as  a  community  becomes  unprosperous.  I  therefore  think 
that  we  have  to  approach  this  problem  from  the  angle  of  seeing  to 
it  that  the  American  shipowner  gets  a  fair  and  just  profit,  as  fair  and 
just  a  profit  as  does  the  American  farmer,  the  American  merchant, 
the  American  miner,  or  the  American  laborer.  If  he  does  not  get  that 
profit,  he  will  not  exist,  and  he  will  have  to  transfer  his  attention  to 
other  industries. 

The  question  is  how  to  get  that  profit;  how  to  resume  control. 
Personally,  I  am  not  an  advocate  of  Government  management  or 
ownership.  I  do  not  believe  that  it  is  possible  for  any  large  organi- 
zation, such  as  a  Government  organization,  to  have  the  keen  eye  for 
the  possibility  of  making  profit,  as  it  is  for  the  business  under  private 
management.  When  you  come  up  in  international  competition  with 
the  English  and  Norwegians,  the  Japanese,  the  Italians,  you  come 
across  people  who  have  40  or  50  years,  at  the  shortest  time,  and  a 
couple  of  centuries,  at  the  longest  time,  training  in  shipbuilding  and 
ship  management,  and  they  have  their  eye  out  for  the  main  chance, 
and  in  my  opinion  the  best  way  of  meeting  that  state  of  affairs  is 
by  having  a  trained  American  shipowning  branch — classification  or 
branch  of  trade,  whichever  you  choose  to  call  it — which  would  be  able 
to  meet  and  beat  them  on  their  own  ground,  and  I  am  sure  you  will 
have  that  if  their  hands  are  not  tied. 


30 

Now,  as  regards  the  present  method  of  achieving  that  result :  I 
think,  as  Mr.  Wood  says,  it  will  be  difficult  if  all  the  American  ships 
were  thrown  on  the  markets  at  once  to  find  a  market  for  them.  I 
think  you  will  have  to  have  some  plan,  such  as  outlined  by  Mr.  Wood, 
or  a  modification  of  that  plan  may  be  arrived  at,  which  will  help  the 
American  international  mercantile  marine — I  am  not  speaking  of 
the  company,  but  the  ships — and  the  international  trade  to  get  on 
their  feet.  That  might  be  done  by  proper  forms  of  chartering, 
proper  forms  of  valuation  of  vessels,  and  proper  arrangements  for 
the  equalizing  of  the  difference  in  cost  between  the  American  wages 
and  foreign  wages,  but  on  that  point  I  would  like  to  give  a  word  of 
caution.  I  do  not  think  a  subsidy  has  ever  put  a  merchant  marine 
on  its  feet.  You  have  got  to  go  out  in  the  open  marts  of  trade  and 
meet  competition,  and  if  you  can  not  do  it,  you  do  not  deserve  to  exist. 

I  would  advocate  some  plan  whereby  private  ownership  may  be 
looked  forward  to  as  the  ultimate  goal,  and  that  that  goal  be  reached 
by  wise  and  successive  steps  enabling  the  American  shipowners  to 
develop  and  to  make  good  his  standing  in  the  international  marts 
of  trade.  To  succeed  in  international  trade  we  must  follow  the  ex- 
ample of  our  great  competitors,  Great  Britain  and  the  late  German 
Empire.  We  find  there  are  three  factors  in  trade  which  have  always 
been  united — banking,  shipping,  and  insurance.  These  three  form 
the  trinity  upon  which  foreign  trade  is  based.  If  one  is  absent,  the 
other  two  are  handicapped. 

In  the  past — I  take  an  illustration  from  Great  Britain,  as  she  is 
the  great  shipping  nation  to-day — in  the  past,  the  English  mer- 
chant has  manufactured  goods  for  export,  the  English  banker  has 
made  loans  to  foreign  countries  for  their  development,  and  as  a  ro- 
sult  of  these  loans,  these  countries  have  been  enabled  to  buy  the  Eng- 
lish merchandise  which  has  been  carried  in  English  ships,  and  to  send 
back  their  merchandise  in  English  ships,  and  thereby  cut  down  the 
freight  rate;  and  that  merchandise  has  been  insured  in  English  ma- 
rine insurance  companies.  They  thereby  keep  their  hands  on  both 
ends  and  the  middle  of  the  stick.  They  are  enabled  to  better  control 
the  foreign  market  in  that  way.  If  they  had  only  been  able  to  im- 
port, without  exporting,  or  only  been  able  to  export  without  import- 
ing, or  if  they  had  to  depend  on  a  foreign  merchant  marine  to  carry 
their  goods  they  would  not  have  been  in  as  advantageous  a  position. 
Obviously  a  merchant  marine  belonging  to  the  country  having  the 
goods  to  sell  will  get  better  service  than  from  the  merchant  marine 
of  a  competitor.  I  would  urge  upon  this  convention  to  adopt  a  plan 
which  will  put  the  American  shipowner  back  upon  the  seas,  because 
until  we  can  arrange  that,  the  farmer,  the  merchant,  and  the  manu- 
facturer in  the  United  States  will  be  handicapped  as  against  our 
foreign  competitors.  They  will  not  have  as  good  service  as  they 
would  had  they  retained  the  merchant  marine. 

If  I  may  say  a  word  for  the  American  marine  underwriter,  he  does 
not  want  any  subsidy  at  all.  He  does  not  want  any  protective  tariff 
on  the  insurance  encf  of  it.  He  feels  quite  confident  if  his  hands  are 
left  untied,  he  can  go  into  the  markets  of  the  world  and  hold  his 
own.  In  the  past  I  have  had  occasion  to  oppose  efforts  which  have 
been  made  to  make  a  discriminating  tariff  in  favor  of  the  American 
marine  company,  and  our  marine  interests  have  grown  under  abso- 


31 

lute  freedom,  so  that  I  do  not  want  you  to  think  I  came  down  here 
holding  any  brief  for  any  interests  at  all.  I  have  come  here  as  a 
citizen,  a  private  citizen,  who  has  watched  American  shipping  for 
quite  a  while  and  my  views  on  this  subject  I  have  expressed.  [Ap- 
plause.] 

Mr.  MARSH.  I  would  like  to  ask  Mr.  Rush  to  explain  to  us  whether 
there  is  sufficient  capital  in  this  country  to  do  all  the  underwriting 
that  our  merchant  marine  now  requires,  or  is  likely  to  require,  in 
reference  to  hulls  and  cargo,  and  what  policy  the  country  should  pur- 
sue, or  the  Government  should  pursue,  in  respect  to  any  surplus  of 
underwriting  that  may  be  necessary. 

Mr.  RUSH.  It  will  give  me  great  pleasure  to  answer  that  question. 
If  I  may  go  back  for  a  shore  time :  In  1914,  before  the  war,  there  was 
not  sufficient  American  capital  to  carry  the  large  values  which  would 
be  required  to  carry  both  the  hull  and  the  value  of  cargo.  Since  that 
time  the  capacity  has  about  doubled.  I  should  say  there  is,  at  the 
present  time,  sufficient  capital  in  American  marine  companies  to 
carry  all  except  the  very  largest  values.  By  the  very  largest  values  I 
mean,  if  }TOU  get  the  Leviathan,  and  filled  her  up  to  a  cargo  equal  to 
her  own  value,  which  would  give  you  about  $20,000,000,  you  would 
not  be  able  to  place  it  in  the  American  market  except  at  very  high 
rate.  You  must  go  around  and  get  the  cheapest  market  you  possibly 
can.  You  are  in  competition  with  the  foreigner.  If  you  can  not  get 
it  over  here  cheaply  enough,  you  will  be  forced  to  go  to  London  or 
France.  It  is  your  life's  blood.  That  is  why  I  say  I  do  not  want 
any  protective  tariff.  There  should  be  a  competitive  market  in  other 
ports  of  the  world  to  keep  the  American  underwriters  from  getting 
a  little  beyond  what  is  just.  But  there  is  at  the  present  time  in 
America  ample  marine  insurance  to  insure  the  hull  value  for  a 
couple  of  million  dollars,  and  to  take  care  of  $5,000,000  or  $6,000,000 
worth  of  cargo.  The  company  which  I  represent,  for  instance,  will 
write  a  half  million;  there  are  various  other  companies  which  will 
do  as  much.  I  do  not  think  you  will  have  the  slightest  trouble  in 
getting  the  going  market  rate  for  a  value  from  $7,000,000  to 
$10,000,000.  After  you  go  over  that,  you  will  have  to  go  abroad. 

Mr.  MARSH.  May  I  ask  two  questions?  Based  on  your  pamphlet, 
Mr.  Hurley,  you  state  that  the  American  marine  insurance  market 
has  not  sufficient  resources  to  underwrite  all  the  vessels  the  Govern- 
ment has  to  sell,  and  also  you  say,  "  Our  experience  in  operation 
shows  that  the  Government  can  carry  this  insurance  for  at  least  1 
per  cent  less  than  the  open  market  rate."  Is  that  a  recommendation 
for  or  against  Government  operation? 

Mr.  RUSH.  Against. 

Mr.  MARSH.  From  the  point  of  view  of  the  corporation  or  of  the 
public  ? 

Mr.  RUSH.  The  public.  We  are  up  against  Government  insurance 
all  the  time.  The  trouble  with  it  is  that  it  is  not  flexible  enough. 
In  theory,  it  is  beautiful.  You  write  off  your  taxes ;  you  do  not  have 
any  taxes  or  expenses  to  pay.  I  had  the  pleasure  of  a  talk  with  Mr. 
George  W.  Norris  on  this  very  point.  He  came  to  me  and  asked  if 
I  would  not  insure  farm  loans  at  a  given  rate.  I  said  no.  He  wanted 
to  know  why.  I  said,  "  First,  you  insure  the  man  and  not  the  prop- 
erty." That  is  a  mistake  that  the  people  not  in  the  insurance  busi- 


32 

ness  invariable  make.  In  the  second  place,  insurance  rates  are  as 
fluid  as  water.  We  are  obliged  all  the  time  to  study  the  hazard  of 
each  individual  vessel  and  each  individual  cargo  and  each  individual 
voyage,  and  it  varies.  A  steamer  carrying  cargo  from  the  United 
States  to  Europe  or  any  port  of  the  world  may  very  well  have  two 
or  three  hundred  different  kinds  of  cargo  and  they  are  all  susceptible 
to  different  kinds  of  damage.  That  is  carefully  tabulated  and  item- 
ized, so  that  John  Smith  shall  not  pay  for  the  losses  of  Tom  Jones. 
That  is  the  function  of  an  insurance  man. 

I  recently  had  occasion  to  employ  the  efficiency  expert  who  had 
just  made  an  examination  of  the  United  States  Steel  Co.,  and  I  asked 
him  if  he  could  devise  a  better  method  of  keeping  tab  on  the  cost  of 
my  operations,  and  they  reported,  to  my  surprise,  and,  possibly,  to 
his  own,  that  the  insurance  company  of  North  America  necessarily 
required  a  greater  amount  of  bookeeping  to  achieve  their  results 
than  the  United  States  Steel  Corporation.  Now,  every  insurance 
company  keeps  an  account  of  every  marine  policy  on  its  books.  They 
also  keep  an  account  of  the  different  kinds  of  cargo,  and  it  is  for  that 
reason  that  a  private  company,  operating  for  profits — and,  including 
interest  on  our  investment,  over  a  series  of  40  years,  our  profit  has 
not  amounted  to  any  more  than  5  per  cent — would  we  get  better 
results  than  the  Government,  without  the  spur  of  profit  consideration. 
Furthermore,  that  stimulus  of  profit  is  of  the  very  greatest  benefit 
to  the  community  at  large — I  will  give  an  instance;  the  farmers  of 
this  country  raise  cattle.  A  large  portion  of  those  cattle  were  shipped 
abroad.  They  used  to  ship  them  abroad  and  insure  them  against 
perils  of  the  sea  and  also  against  loss  by  death.  The  mortality 
amongst  those  cattle  was  very  great.  It  got  up  as  high  as  6  out  of 
every  100,  and  private  underwriters  got  very  shy  of  it;  the  marine 
rate  was  7  per  cent,  and  one  of  the  marine  companies  thought  that 
with  a  rate  of  that  kind  there  must  be  some  leaks  that  could  be 
stopped  up.  They  made  an  investigation  and  this  is  what  they  did. 
I  give  it  to  you  in  detail,  to  show  how  the  insurance  companies  oper- 
ate. They  found  that  the  trouble  was  due  to  the1  fact  that  freights 
were  collected  in  advance  as  soon  as  the  beasts  were  shipped,  and 
the  vessel's  captain  or  shipowner  did  not  care  whether  they  landed 
or  not.  They  had  their  freight  moneys  paid  in  advance.  The  result 
was  that  a  dead  steer  was  as  good  to  them  as  a  live  steer.  It  was 
not  as  good  to  the  man  who  had  to  eat  it,  because  the  sharks  got  the 
dead  one.  We  made  investigations,  with  the  result  that  it  was  neces- 
sary to  have  the  beasts  properly  inspected  for  red- water  and  other 
cattle  diseases,  so  that  they  could  go  abroad  in  sound  condition.  We 
could  not  alter  the  payment  of  freights,  but  we  gave  the  captain  of 
each  vessel  a  shilling  for  every  head  that  landed,  less  a  pound  for 
every  head  that  was  lost ;  we  also  arranged  that  he  did  not  ship  more 
than  he  had  air  space  for;  we  arranged  for  proper  ventilation.  To 
make  a  long  story  short,  the  business  which  had  cost  the  underwriters 
a  lot  of  money  at  6  per  cent  was  ultimately  written  at  a  profit,  at  a 
quarter  of  1  per  cent,  and  the  saving  to  the  American  farmer  and  to 
the  domestic  consumer  as  well  as  the  foreign  consumer  was  pretty 
close  to  $5.75  on  every  $100  over  a  period  of  about  10  years  because 
of  the  careful  investigation  of  each  individual  risk.  That  is  why  I 
maintain  that  private  insurance  companies  are  cheaper  in  the  long 
run  than  any  large  Government  concern  can  be. 


33 

Mr.  HURLEY.  Are  there  any  other  questions  ? 
Mr.  RUSH.  As  I  say,  I  do  not  represent  private  interests. 
Mr.  HURLEY.  Gentlemen,  we  will  recess  until  3  o'clock. 
(Whereupon,  at  12.52  o'clock  p.  m.,  the  meeting  recessed  until  3 
o'clock  p.  m.  this  day.) 

AFTER    RECESS. 

The  meeting  reconvened  at  3.15  o'clock  p.  m. 

Mr.  HURLEY.  I  would  like  to  hear  from  Mr.  Welding  Ring,  Cham- 
ber of  Commerce,  New  York  City. 

Mr.  RING.  Mr.  Chairman  and  gentlemen,  Mr.  J.  B.  Smull  and  my- 
self have  come  here  as  representatives  of  the  New  York  Chamber 
of  Commerce.  Most  of  you  are  acquainted  with  that  institution, 
but  for  those  that  are  not,  I  desire  to  state  that  it  is  probably  the 
largest  shipping  body  in  the  United  States.  There  are  a  larger  num- 
ber of  men  interested  in  shipping  connected  with  that  institution 
than  with  any  other  institution  anywhere.  We  are  therefore  vitally 
interested  in  this  question  that  is  before  the  Shipping  Board  at 
the  present  time.  It  not  only  has  members  in  the  shipping  business, 
but  it  has  a  large  number  of  members  who  are  in  the  exporting 
trade,  the  importing  trade,  both  of  which  are  vitally  interested  in  the 
shipping  question,  so  I  think  that  we  are  as  extremely  interested  in 
the  subject  of  an  American  merchant  marine  as  any  other  institu- 
tion or  any  body  of  men,  not  even  excepting  our  friend  who  spoke 
this  morning  about  the  very  great  interest  that  the  agricultural  people 
have  in  shipping. 

That  reminds  me  that  several  years  ago  in  St.  Louis  one  of  the 
members  of  the  Government  made  a  statement  at  a  meeting  of  the 
Foreign  Trade  Council  that  there  were  plenty  of  ships  to  be  had, 
and  he  had  a  friend  in  Worcester,  Mass.,  who  had  12  vessels  which 
he  would  like  to  dispose  of  at  once.  I  asked  him  how  it  was  that 
a  shipping  man  went  to  Worcester,  Mass.  He  didn't  know.  I  asked 
him  if  he  would  kindly  turn  over  some  of  that  tonnage  to  me,  that 
I  could  use  it  right  away  very  handily,  but  I  never  got  it.  So  I 
am  afraid  that  some  of  our  people  in  the  far  West,  Northwest,  and 
Southwest  are  not  so  familiar  with  the  shipping  question  as  those 
on  the  seaboard. 

The  chamber  of  commerce  has  been  greatly  interested  in  this 
subject,  and  last  December,  after  the  ending  of  the  war,  they  appointed 
a  special  committee  for  consideration  of  the  entire  subject.  They 
had  numerous  meetings,  and  the  committee  was  composed  of  mem- 
bers who  are  fairly  familiar  with  shipping  conditions.  The  result 
of  that  was  that  they  drew  up  a  report  and  presented  it  to  the 
chamber,  which  was  unanimously  adopted.  I  will  not  read  all  of  the 
report,  but  I  would  like  to  file  it  with  you,  Mr.  Chairman,  as  a 
matter  of  reference.  I  will  read,  however,  two  of  the  resolutions 
that  were  passed  at  that  time: 

Resolved,  That  the  United  States  Shipping  Board  be  urged  to  confer  without 
delay  with  practical  shipping  men,  with  the  view  of  determining  whether  the 
ships  proposed  to  be  built  by  the  Emergency  Fleet  Corporation  are  of  the 
type,  size,  and  construction  best  suited  to  enable  this  country  to  compete  in 
foreign  trade  with  the  merchant  marine  of  other  nations  and  what  changes 
should  be  made  to  effect  that  purpose;  and 

121034—19 3 


34 

Resolved,  That  the  Chamber  of  Commerce  of  the  State  of  New  '  York 
recommends  to  the  President,  to  the  Congress,  and  to  the  United  States  Ship- 
ping Board  a  careful  consideration  of  the  general  features  of  the  plan  sug- 
gested in  this  report,  and  urges  prompt  action  by  the  Government  in  declaring 
its  future  policy,  in  order  that  the  merchants  of  the  country  may  know  how  to 
adjust  themselves  as  ram'dly  as  possible  to  the  changing  conditions  of  the 
world's  business  and  upon  what  plan  they  may  proceed  to  provide  for  tl it- 
future  needs  of  the  country. 

The  full  report  I  will  file  with  you,  Mr.  Chairman.  The  sub- 
stance of  this  report  is  very  much  in  line  with  the  address  delivered 
by  our  chairman  in  New  York  some  three  or  four  weeks  ago,  which 
outlined  his  views  that  the  Shipping  Board  tonnage  should  be  dis- 
posed of  as  rapidly  as  possible  to  private  interests  on  terms  made 
as  advantageous  for  the  Government  as  possible,  and  also  for  the 
buyers,  paying  a  certain  percentage  in  cash  and  the  balance  to  be 
paid  in  yearly  payments  covering  a  period  of  years. 

They  also  indorse  the  proposition  that  it  was  not  feasible,  or  at 
least,  not  desirable,  that  this  shipping  should  be  handled  by  the  Gov- 
ernment; that  they  deemed  it  could  be  done  very  much  better  by 
private  individuals,  either  as  firms  or  as  corporations;  thai  the  ex- 
pense of  doing  so  would  be  very  much  less  than  by  the  Government, 
and  that  everything  in  connection  with  shipping  would  be  very  much 
better  carried  on  by  private  enterprise  than  by  the  Government. 

I  think  there  is  perhaps  one  point  which  was  lost  sight  of  by  the 
gentleman  this  morning  in  speaking  of  the  owning  and  operation  of 
ships  by  the  Government.  I  don't  think  he  realized  the  fact  that 
ships  trade  in  all  ports  of  the  world,  those  which  are  well  known  and 
some  which  are  less  known,  and  it  is  necessary  not  only  to  have  the 
operators  in  the  United  States  to  handle  the  vessels  while  they  are 
loading  here,  or  while  they  are  discharging  here,  but  they  must  have 
representation  in  every  other  port  of  the  world  to  which  these  ships 
go.  To  affect  such  an  organization  for  the  Government  and  to  have 
the  Government  establish  agencies  throughout  the  world  would  not 
only  be  a  very  expensive  operation,  both  for  the  establishment  and 
the  continuance  of  the  thing,  but  it  would  also  take  a  long  while  to 
do  it.  Now  private  operators  of  ships  have  these  agencies  in  hand 
at  the  present  time.  That  has  been  their  business  and  they  are  thor- 
oughly familiar  with  it.  They  know  where  certain  trades  can  be  ob- 
tained, how  they  can  be  obtained,  and  where  it  is  best  to  send  ships ; 
where  it  is  best  to  avoid  sending  them.  This  is  something  that  the 
Government  would  have  to  learn  after  a  long  experience,  and  I  don?t 
think  it  could  be  accomplished  until  after  many  years  of  arduous 
work.  For  that  reason  I  think  the  Government  operation  would  be 
undesirable. 

The  chamber  of  commerce  has  not  entered  into  any  detailed  plans 
except  to  indorse  in  a  general  way  those  submitted  by  Chairman 
Hurley,  and  we  are  here  simply  to  represent  them  and  state  that  they 
are  back  of  the  Shipping  Board  in  its  endeavor  to  bring  this  very 
important  issue  which  we  think  Avill  be  favorable  for  all  concerned. 

Mr.  HURLEY.  Mr.  E.  P.  Thomas,  of  the  National  Foreign  Trade 
Council,  New  York  City. 

Mr.  THOMAS.  Mr.  Chairman  and  gentlemen:  Mr.  W.  H.  Knox 
and  myself  were  appointed  by  Mr.  P.  S.  Franklin,  who  I  believe  will 
be  here  to-morrow  on  behalf  of  the  National  Foreign  Trade  Council, 
to  represent  them  at  this  meeting. 


35 

The  National  Foreign  Trade  Council  consists  of  68  members  from 
every  section  of  the  Union,  and  representing  every  species  of  manu- 
facturer and  producers  interested  in  the  foreign  trade  of  the  United 
States,  including  the  banking,  shipping,  railroad,  and  other  interests. 
For  the  past  6  years  they  have  called  an  annual  convention  of  all  for- 
eign trade  interests  of  the  United  States,  the  first  having  been  held 
in  this  city  6  years  ago.  At  the  last  convention  held  on  April  23, 
24,  25,  and  26  of  this  year,  there  were  assembled  in  the  city  of 
Chicago  2,000  delegates  from  every  State  in  the  Union,  representing 
all  the  largest  associations  that  have  any  interest  whatever  in  the 
foreign  trade  of  the  United  States,  both  export  and  import.  Among 
the  larger  associations  there  were  the  American  Manufacturers  Ex- 
port Association,  the  American  Exporters  &  Importers  Association, 
the  National  Association  of  Credit  Manufacturers,  American  Bankers 
Association,  and  upward  of  100  additional  associations  were  repre- 
sented, and  the  subject  of  the  American  merchant  marine  was  given 
considerable  attention  during  the  entire  session,  one  session  being 
devoted  entirely  to  it.  The  consensus  of  opinion  undoubtedly  favored 
Chairman  Hurley's  plan  as  a  basis  for  the  development  of  fixed 
principles,  and  was  received  generally  with  marked  approval. 

Among  the  other  points  made  at  the  convention  with  respect  to  the 
question  of  private  ownership  as  against  Government  ownership 
were  the  striking  facts,  as  Chairman  Hurley  has  pointed  out,  that 
with  the  completion  of  the  shipbuilding  program  there  will  be  1,890 
ships  owned  by  the  United  States  Government,  constituting  TO  per 
cent  of  the  total.  These  1,890  vessels  represent  12,660,000  tons  of 
shipping,  and  must  naturally  be  a  subject  of  serious  consideration  as 
to  the  manner  in  which  any  governmental  organization  would  be  able! 
to  cope  with  the  problem  of  handling  nearly  2,000  ships  of  over  12,000,- 
000  tons  with  all  the  collateral  difficulties  surrounding  it,  touched 
upon  by  Mr.  Ring  in  respect  to  foreign  organizations  in  practically 
every  port,  to  supplement  the  work  of  the  American  board.  Con- 
sideration was  also  given  to  the  problem  as  to  what  would  beconle  of 
the  other  30  per  cent  of  the  shipping,  representing  at  the  present  time 
some  4,000,000  tons  if  it  had  to  enter  into  competition  with  the -Gov- 
ernment. 

These  questions  were  submitted  in  full  detail  to  -a  committee  ap- 
pointed by  the  convention,  consisting  of  74  delegates  representing 
practically  every  class  of  manufacture  in  the  United  States  which 
was  susceptible  to  export  or  to  import,  and  representing  as  well  the 
producers  of  farm  products;  and  this  committee  evolved  recom- 
mendations which  were  at  the  final  session  of  the  National  Foreign 
Trade  Convention  adopted  unanimously,  and  I  beg  to  submit  them  to 
you  and  this  board  as  the  final  and  definite  conclusion  of  the  prin- 
ciples adopted  by  a  convention  which,  I  think,  truly  and  perhaps, 
solely,  represents  the  foreign  trade  thought  of  the  United  States/ 
\Yith  your  indulgence — they  are  brief  and  cover  merely  the  prin- 
ciples without  going  at  this  time  into  details— I  will  read  them : 

MERCHANT   MARINE    NEEDS- 

Wo  urge  the  earliest  possible  completion  of  the  Government's  present  ship- 
building program. 

As  shipbuilding  is  one  of  the  greatest  essentials  for  the  prosperity  of  Ameri- 
can industry,  the  Government  should  immediately  remove  all  restrictions  now 


36 

placed  in  American  shipbuilding  and  permit  the  free  construction  of  vessels 
for  sale  to  foreign  interests. 

The  imperatively  necessary  revision  of  our  shipping,  navigation,  classifica- 
tion, and  measurement  laws  should  be  accomplished  without  delay  so  that 
American  vessels  can  be  placed  on  a  more  equitable  basis  of  competitive  opera- 
ting costs  in  foreign  trade. 

GOVERNMENT    OPERATION    OF    SHIPS   OPPOSED. 

While  Government  ownership  and  reasonable  Government  control  of  Ameri- 
can shipping  must  continue  until  some  acceptable  plan  is  devised  for  the 
transfer  of  such  tonnage  to  private  ownership,  we  are  opposed  to  any 
continuance  of  Government  operation  and  urge  that,  consistent  with  recognized 
war  emergency  needs,  these  Government  owned  vessels  be  allocated  to  suitable 
trades  and  trading  routes  for  operation  by  any  qualified  competent  American 
shipping  enterprise,  under  conditions  of  sale  or  charter  that  will  permit  of  their 
sending  the  American  flag  to  any  port  of  the  world  on  a  fair  trading  competi- 
tive basis  with  that  of  any  other  maritime  nation. 

AMERICAN    BUNKER    DEPOTS    NEEDED. 

We  also  urge  the  immediate  consideration  of  the  necessity  for  establishing 
•coal  and  fuel-oil  depots  on  all  the  great  foreign-trading  routes  so  that  American 
shipping  shall  not  be  left  dependent  upon  foreign-owned  facilities  for  such 
vital  service. 

American-built  ships  for  American  foreign  trade — freed  from  all  burdensome 
restrictions — a  fair  world  field  and  no  favors  other  than  those  known  to  be 
absolutely  essential  to  the  reconstruction  and  highest  possible  development  of 
our  American  merchantile  marine — is  the  crying  need  of  the  day,  if  the  United 
States  is  ever  to  win  its  rightful  place  in  international  commerce. 

Mr.  THOMAS.  These  general  recommendations  are,  of  course,  sus- 
ceptible to  the  working  out  in  detail  of  a  plan  such  as  has  been  pro- 
posed by  Chairman  Hurley  and  others  and  my  coassociate,  Mr.  W.  H. 
Knox,  has  certain  views  to  express,  which  I  would  be  glad  to  have 
you  invite  him  to  do,  which  in  the  main  covers  the  essential  points 
but  any  final  declaration  of  details  so  far  as  the  approval  of  the  Na- 
tional Foreign  Trade  Council  is  concerned,  will  naturally  be  left  to 
their  consideration  at  a  subsequent  meeting  and  would  be  submitted 
in  more  detail  to  the  chairman. , 

Mr.  HURLEY.  Mr.  W.  H.  Knox,  representing  the  American  Export- 
ers &  Importers  Association,  New  York  City,  we  would  like  to  hear 
from  you,  please. 

Mr.  KNOX.  Mr.  Chairman  and  gentlemen,  with  the  thought  that 
we  can  perhaps  make  greater  progress  in  this  discussion  by  attempt- 
ing to  limit  our  views  to  concrete  issues,  we  beg  to  submit  the  follow- 
ing suggestions  for  that  purpose,  it  being  understood,  of  course,  that 
they  are  not  to  be  considered  as  any  definite  recommendations  on 
the  part  of  the  National  Foreign  Trade  Council.  I  would  also  like 
to  state  that  we  represent  an  old-time  association  in  New  York  City 
which  holds  among  its  membership  the  pioneers  in  the  foreign  trade 
of  this  country  whose  lives  have  been  spent  in  the  promotion  of  this 
country's  interests  in  overseas  commerce,  both  export  and  import, 
and  simply  as  a  matter  of  interest,  I  should  say  that  in  the  year  of 
1918  the  normal  trading  operations  of  that  association  represent  a 
sum  in  excess  of  $1,000,000,000.  Consequently  the  views  which 
they  may  express  at  this  conference  might  perhaps  be  given  considera- 
tion from  a  standpoint  of  men  who  have  spent  their  lives  in  per- 
sonally handling  in  a  large  way  the  very  problem  that  is  now  con- 
fronting your  body. 


37 

1.  We  advocate  the  completion  of  present  building  program  cov- 
ering construction  of  steel  ships— these  to  be  of  types  known  to  be 
best  suited  for  the  employment  required. 

2.  Some  definite  declared  policy  providing  for  Government  owner- 
ship and  control  of  all  vessels  unsold  to  be  determined  for  a  period, 
and  this  subject  to  modifications  on  the  following  lines: 

3.  The  earliest  possible  establishment  by  Government  of  fast  pas- 
senger mail  and  general  cargo  lines  on  -  the  most  important  foreign 
trading  routes — these  to  have  regular  sailing  dates  and  operating 
schedules  to  suit  trade  needs. 

4.  The  sale  of  Government-owned  steel  tonnage  to  be  limited  to 
American  owned  and  operated  shipping  enterprises  on  some  basis 
which  would  permit  of  purchase  price  being  fixed  at  the  actual  world 
market  valuation  of  similar  tonnage,  with  payment  in  full  or  on  an 
installment  basis  with  revaluation  at  each  payment  period,  the  mort- 
gage or  contract  obligations  of  buyers  to  carry  an  interest  charge  not 
exceeding  4  per  cent. 

5.  The  lease  or  charter  of  Government-owned  tonnage  to  be  lim- 
ited to  American  operators  on  terms  and  conditions  based  on  no  more 
than  the  necessary  reasonable  return  to  Government  of  a  fair  rate  of 
interest  on  the  world  market  value  of  the  tonnage  so  chartered  and 
reasonable  provision  for  depreciation.    As  an  inducement  for  char- 
terers to  take  over  the  ships,  an  arrangement  whereby  the  charter 
moneys  paid  could  apply  to  purchase  price. 

6.  Government  to  remove  all  restrictions  as  to  the  use  of  tonnage 
sold  or  chartered  to  American  operators,  and  control  of  all  shipping 
to  be  limited  to  the  possible  fixing  of  maximum  freight  rates.    Any 
determined  harmful  foreign  competition  in  freight  rates  to  be  met  by 
proportionate  reductions  in  the  purchase  price  and/or  chartered  rates 
being  paid  Government. 

7.  We  are  opposed  to  Government  operation  of  American  shipping 
in  any  form.    This  should  be  left  exclusively  in  the  hands  of  Ameri- 
can enterprise. 

8.  The  necessary  revision  and  changes  in  our  navigation,  shipping, 
and  measurement  laws  to  permit  of  American  tonnage  competing  in 
ocean-carrying  trades  with  other  maritime  nations  on  a  more  equitable 
basis. 

9.  Government  to  assist  in  the  establishment  of  coal  and  fuel  oil 
depots  for  the  use  of  American  shipping  on  all  the  great  trading 
routes,  and  also  to  provide  measures  that  would  prevent  any  discrimi- 
nation against  American  shipping  by  foreign  nations. 

10.  That  new  construction  for  foreign  account  be  encouraged  in 
every  possible  way. 

11.  That  all  steel  tonnage  under  construction  and/or  completed 
for  foreign  account  during  the  war  shall  be  retained  by  Govern- 
ment and  placed  at  the  disposal  of  American  shipping  needs  under 
reasonable  sale  and/or  leasing  terms. 

12.  That  all  our  wooden  ships  be  sold  to  the  highest  bidder  and  that 
the  completion  of  such  tonnage  now  under  construction  be  limited 
to  vessels  so  nearly  finished  that  abandonment  would  entail  greater 
loss  than  completion. 

Mr.  Chairman,  if  it  would  be  possible  so  to  do,  we  suggest  that,  if 
it  meets  with  the  approval  of  this  conference,  that  we  attempt  to  dis- 


38 

cuss  these  or  any  other  suggestions  advanced  so  that,  if  possible,  we 
may  be  able  to  exhaust  a  discussion  on  any  one  given  point  and  it 
will  be  kept  away  from  desultory  discussion  on  matters  that  may  not 
be  germane  to  the  particular  point. 

For  the  benefit  of  our  agricultural  friends  who  talked  to  us  this 
morning  I  would  like  to  point  out  several  matters  on  which  they  are 
perhaps  misinformed  as  to  the  facts.  The  question  was  raised  that 
the  farmers — the  agricultural  interests  in  this  country,  put  it  in  my 
language — wanted  a  square  deal  on  freight  rates  in  their  commodities. 
Surely  they  must  understand  that  those  freight  rates  are  necessarily 
to  be  subject  to  world  competition  and  as  a  result  there  can  be  no 
exhprbitant  rates  charged  by  private  ownership  for  the  carriage  of 
agricultural  commodity  which,  as  is  always  the  fact,  those  same  com- 
modities must  compete  with  similar  commodities  of  other  nations. 
Consequently  if  private  ownership  be  established  the  matter  of 
freight  rate 'must  automatically  adjust  itself  to  the  inevitable  law  of 
supply  and  demand  and  the  same  thing  necessarily  applies  to  the 
administration  of  private  owned  ships  as  to  the  point  of  profiteering, 
when  to  operate  those  ships  this  country  must  face  the  keenest  and 
best  equipped  maritime  knowledge  of  the  world.  What  the  people  of 
this  country  need  is  not  so  much  protection,  nor  do  we  need  subsidies 
from  the  point  of  being  nursed  up  to  our  adult  growth  in  shipping, 
but  what  we  do  need  is  the  restoration  of  American  ability  to  do  our 
foreign  trading  on  any  basis  which  will  permit  our  competing  with 
the  world.  [Applause.] 

Mr.  HURLEY.  Mr.  J.  R.  Howard,  representing  the  Iowa  Farm 
Bureau. 

Mr.  HOWARD.  Mr.  Chairman  and  gentlemen,  not  having  attended 
this  morning's  conference  I  did  not  hear  the  discussion  which  has 
been  referred  to,  whereby  the  agricultural  interests  were  represented. 
I  am  here  representing  the  Federal  farm  bureaus  of  the  State  of  Iowa 
with  50,000  members.  I  have  also  telegrams  from  the  Iowa  Grain 
Growers'  Association  operating  over  400  elevators,  with  an  average 
membership  of  perhaps  75  farmers  to  each  organization,  and  the 
Iowa  Wool  Growers'  Association  with  a  membership  of  10,000  or 
15,000,  and  I  am  not  prepared,  because  we,  as  farmers,  have  not 
given  this  matter  of  merchant  marine  sufficient  study  to  commit  the 
Iowa  farmers  to  any  definite  policy. 

In  the  beginning  I  would  like  to  speak  of  one  or  two  things  which 
we  are  opposed  to.  In  Iowa  we  have  had  some  experience  in  the  last 
•year  with  Government  owned,  or  rather  Government  operated  rail- 
ways and,  basing  our  idea  of  a  Government  operated  merchant 
marine,  or  a  Government  owned  merchant  marine,  upon  our  expe- 
rience with  our  railroad  shipping  under  Government  operation,  we 
don't  want  any  Government  control  or  operation  of  merchant  marine. 
[Applause.] 

Now,  I  think  we  would  not  object  to  a  privately  owned  merchant 
marine  with  a  split  Government  control,  although  I  am  not  going 
into  details  or  make  any  suggestions  because  I  am  here  to  learn 
exclusively.  There  are  just  one  or  two  points  of  view,  however,  with 
regard  to"  our  middle- west  farmers.  We  represent  the  agricultural 
section  of  the  country  which  creates  a  surplus.  Statistics  show  that 
one  Iowa  farmer  produces  three  times  as  much  food  stuff  as  the 


39 

average  farmer  of  the  United  States.  Therefore,  when  we  are  selling 
our  commodities  the  shipping  is  of  vital  importance  to  us.  The 
farmer,  like  the  manufacturer,  must  have  a  market  for  the  stuff  which 
he  produces,  and,  unlike  the  manufacturer,  he  can  not  always  tell  very 
much  in  advance  about  what  the  market  will  be. 

However,  we  know  that  well  paid  American  labor  is  our  best  cus- 
tomer and  if  we  can  promote  American  manufacturing,  American  in- 
dustries, with  a  well  paid  American  labor  who  will  eat  the  products 
of  our  farm,  consume  them  at  good  round  prices,  we  have  found  a 
good  market.  Then  it  becomes  a  matter  of  taking  care  of  the  surplus. 
We  believe  in  American  markets  for  American  products  and  then  to 
take  care  of  the  surplus  in  the  best  possible  way.  That  depends,  of 
course,  upon  the  merchant  marine. 

I  wish  to  apologize  a  little  for  the  views  of  a  good  many  farmers. 
They  appear  to  me  possibly  to  be  just  a  little  narrow,  inasmuch  as 
they  are  opposed,  many  of  them,  to  any  merchant  marine  whatever. 
They  have  an  idea  that  these  ships  will  go  to  foreign  countries,  carry- 
ing the  products  of  our  factories  and  come  back  loaded  exclusively 
with  corn,  wheat,  and  meat.  If  that  were  true,  I  think,  we  would 
all,  every  one  of  us  present,  oppose  a  merchant  marine,  for  I  think 
that  it  is  known  that  your  own  businesses  depends  upon  the  product 
of  the  farm  and  the  prosperity  of  the  country  at  large  is  pretty  much 
the  prosperity  of  the  farmer.  I  feel  perfectly  safe  as  a  farmer  in 
trusting  the  interests  of  the  farmers  in  the  hands  of  the  business 
men.  but  at  the  same  time  I  think  the  farmer  must  be  in  a  position 
to  look  out  for  himself,  too,  and  express  his  own  opinion. 

So  at  this  time  I  am  not  prepared  to  make  any  definite  statement 
other  than  we  are  opposed  to  Government  owned  merchant  marine  or 
railroads  and  that  we  are  in  favor  of  any  project  which  will  stimulate 
American  industry  and  American  labor.  [Applause.] 

Mr.  HURLEY.  Mr.  Thompson,  Illinois  Agricultural  Association. 

Mr.  THOMPSON.  I  am  here  to-day  representing  the  Illinois  Agricul- 
tural Association,  an  association  very  similar  in  structure  to  the  one 
which  Mr.  Howard  represents,  being  a  grouping  together  of  67  farm 
bureaus  of  the  State  of  Illinois,  with  a  membership  of  approximately 
50,000  farmers  in  the  State.  We  have  had  very  similar  experience  to 
that  of  Mr.  HoAvard  in  our  shipping  under  Government  operation  of 
the  railways,  especially  as  relates  to  the  shipment  of  live  stock,  and, 
basing  our  experience  on  that,  we  are  inclined  to  feel  that  we  would 
not  favor  the  Government  ownership  and  operation  of  a  merchant 
marine.  We  know  a  lot  more  about  box  cars  out  in  Illinois,  how- 
ever, than  we  do  about  ships.  Therefore  I  am  here  to-day  to  repre- 
sent our  farmers,  not  only  by  counseling  when  I  may,  but  also  to  learn 
everything  possible  from  such  a  conference.  We  do  create  a  good 
deal  of  shipping  out  in  the  prairies  of  Illinois  and  are  naturally 
very  interested  in  any  transportation  system  which  will  mean  that 
the  grains  and  meats  which  we  produce  can  be  carried  to  the  mar- 
kets of  the  world  in  a  economical  and  efficient  manner.  I  hope  that 
out  of  this  conference  may  come  the  right  conclusion  in  the  matter 
of  the  merchant  marine.  What  that  conclusion  is,  I  am  not  prepared 
to  say. 

Mr.  HURLEY.  Mr.  James  O'Connell,  of  the  American  Federation  of 
Labor,  Washington,  D.  C. 


40 

Mr.  O'CoNNELL.  Mr.  Chairman  and  gentlemen  of  the  convention, 
I  regret  very  much  that  President  Gompers  has  been  ill  and  has 
not  been  able  to  be  present.  He  asked  two  other  gentlemen  and 
myself  to  represent  the  federation  at  this  conference. 

I  have  listened  with  much  interest  to  the  discussions  that  have 
taken  place,  particularly  to  the  splendid  presentation  of  the  matter 
by  the  chairman.  The  different  elements  here  are  very  naturally 
interested  in  the  peculiar  operation  of  industrial,  manufacturing,  or 
financiering  in  which  they  are  directly  associated.  We  are  particu- 
larly interested  in  the  labor  of  human  beings,  and  we  are  very  par- 
ticularly interested  in  how  that  labor  should  be  employed,  and  under 
what  conditions  it  should  be  employed. 

The  American  Federation  of  Labor  is  an  organization  represent- 
ing 3,000,000  workmen  and  has  never  gone  on  record  as  being  in 
favor  of  complete  Government  ownership.  It  is  on  record  for  the 
ownership  of  those  things  necessary  for  municipalities,  those  things 
that  are  used  directly  by  the  people,  but  as  far  as  the  ownership  of 
railroads,  the  ownership  of  steamship  lines,  commerce,  it  has  not  as 
yet  gone  on  record  as  being  in  favor,  of  that  proposition.  It  is  very 
likely  that  in  the  convention  in  June,  because  of  the  experience  we 
have  had  during  the  Avar,  that  some  action  may  be  taken  which  may 
lead  toward  that  conclusion.  The  labor  movement  of  this  country 
has  taken  a  very  active  part,  as  you  all  know,  in  the  successful  carry- 
ing on  and  conclusion  of  the  war.  We  have  been  closely  associated 
in  the  building  of  ships,  the  conduct  of  the  Shipping  Board  and  of 
the  Fleet  Corporation.  We  have  been  in  close  association  and  touch 
with  them  in  order  that  ships  might  be  built. 

To  sit  down  all  in  one  day  and  evolve  from  a  very  brief  conference 
a  conclusion  as  to  whether  Government  ownership,  in  so  far  as  the 
Government  has  applied  itself  during  the  war,  has  been  successful  or 
not,  or  whether  we  should  insist  on  complete  private  ownership, 
strikes  me  as  really  attempting  to  perform  a  pretty  big  job  in  a  very 
short  time.  There  is  no  doubt  in  my  mind  but  that  the  public  mind 
has  been  trained  very  materially  in  the  line  of  public  ownership  dur- 
ing the  past  two  years.  I  do  not  mean  to  say  that  the  American  labor 
movement  of  3,000,000  men  is  not  in  favor  of  public  ownership,  be- 
cause there  are  thousands  and  tens  of  thousands  of  men  who  believe 
in  public  ownership.  I  doubt  if  a  vote  was  taken  of  the  railroad  men, 
for  instance,  it  has  been  discussed  here  as  being  a  failure  as  far  as 
Government  ownership  is  concerned,  that  a  vote  would  not  be  largely 
in  favor  of  Government  ownership.  In  fact,  at  conferences  recently 
held,  a  plan  has  been  submitted  to  Congress,  which  has  the  indorse- 
ment of  nearly  all  the  prominent  organizations  in  the  country  and 
particularly  the  railroad  organizations,  looking  toward  the  Govern- 
ment's complete  control  of  railroads.  I  do  not  mean  to  say  that  under 
Government  control  during  the  past  two  years  the  railroads  have 
been  operated  efficiently  or  successfully.  I  do  mean  to  say,  however, 
that  the  question  of  Government  operation  of  the  railroads  during 
the  past  two  years  has  not  brought  out  a  position  where  a  man  could 
indicate  that  the  Government  has  made  a  failure  of  the  operation  of 
railroads. 

You  must  know  that  the  railroads  came  over  to  the  Government 
under  a  demoralized  condition;  and  it  was  found  necessary  to  com- 
pletely equip  the  railroads  of  this  country  and  put  them  on  a  working 


41 

basis.  The  men  in  charge  of  private  railroads  were  not  in  agreement 
with  the  Government  in  taking  the  railroads  over,  and  did  not  give 
the  cooperation  and  assistance  in  making  the  operation  of  the  rail- 
roads a  success  by  the  Government,  that  might  have  been  expected. 
If  it  were  understood  and  so  ordered  by  the  proper  authority  of  our 
country  that  the  railroads  were  to  be  operated  and  owned  by  the  Gov- 
ernment quite  a  different  state  of  affairs  might  exist ;  but  the  fact  was 
well  known,  or  at  least  it  was  thought,  that  the  railroads  would  sooner 
or  later  be  turned  back  to  their  original  owners;  therefore  my  expe- 
rience with  those  with  whom  I  have  come  in  contact,  who  had  to  do 
with  railroad  affairs,  indicates  that  instead  of  the  Government  getting 
the  service  which  would  make  it  successful  in  operating  the  railroads 
the  opposite  result  was  obtained,  because  of  the  desire  to  make  it  appear 
that  the  Government  could  not  operate  railroads.  I  am  not  here  to 
defend  the  Government,  nor  have  I  any  right  to  attempt  to  defend 
the  Government,  in  its  operation  of  railroads.  Speaking  from  what 
I  see  and  hear  and  know,  in  a  practical  way,  of  the  operation  of  the 
railroads  is  all  that  I  can  do. 

The  farmer  is  interested  in  his  products  of  course,  getting  the 
highest  possible  price  for  it,  getting  it  to  the  market  in  the  best  possi- 
ble condition;  the  shipbuilder  is  interested  in  selling  ships,  and  ob- 
taining the  best  possible  profit  as  a  result  of  his  labor.  The  commer- 
cial interests  are  interested  in  the  operation  of  ships;  the  financial 
interests  are  interested  in  the  financial  side  of  that  proposition.  Now 
a  great  factor  in  all  this  question  that  must  be  seriously  considered  is 
the  labor  power  required,  whether  it  be  Government  owned  or  pri- 
vately owned.  The  laboring  man  is  interested  in  knowing  whether 
he  is  going  to  have  the  best  condition  of  employment  under  Govern- 
ment or  private  ownership.  He  has  had  the  experience  of  many,  many 
years  of  private  ownership.  He  is  best  able  to  speak  for  himself  as 
to  whether  or  not  that  has  been  successful.  He  has  had  little  or  no 
experience  as  to  Government  ownership.  You  might  say,  "  Why  take 
a  chance  with  a  devil  you  do  not  know  rather  than  one  you  do  know  ?  " 
If  I  know  anything  of  what  has  been  said  publicly  by  those  interested 
in  the  men  engaged  in  the  shipping  operations — I  mean  by  that  the 
laboring  side  of  it — their  opinion  has  been  that  their  interests  have 
not  been  properly  considered  by  the  private  interests  who  have  oper- 
ated the  shipping  interests  of  our  country. 

War  has  given  an  impetus  both  to  all  kinds  of  shipping  questions — 
first,  the  building  of  ships ;  second,  the  operation  of  them.  We  know 
more  about  ships  now;  at  least,  we  ought  to  know  more  about  ships 
just  now  than  ever  before  in  our  lives.  We  have  had  nothing  but  ship 
talk  for  the  past  two  or  three  years.  Almost  daily  Mr.  Hurley  is  in 
the  paper  with  something  about  ships;  either  building  or  canceling. 
It  is  one  or  the  other  every  day — we  are  going  to  build  about  a  million 
dollars'  worth  of  ships,  or  we  are  going  to  cancel  about  a  million  dol- 
lars' worth.  We  are  going  to  sell  those  we  built,  or  we  are  going  to 
holfl  those  we  built.  The  laboring  man  is  in  a  quandary  as  to  what  the 
shipping  people  mean  and  what  they  are  about.  We  will  be  glad  to  be 
of  service  in  every  way  possible  to  work  out  a  real  businesslike  and 
practical  shipping  plan  which  will  give  stability  to  the  shipbuilders 
of  the  country  and  an  assurance  of  stability  of  good  and  safe  employ- 
ment for  the  workers  of  the  country. 


42 

_  I  do  not  pretend,  nor  do  I  think  anybody  on  our  side  of  this  ques- 
tion pretends,  right  offhand,  to  say  what  should  be  done,  but  I  believe 
the  question  of  whether  the  ships  should  be  operated  by  the  Govern- 
ment or  private  owner  is  one  that  ought  to  receive  great  consideration, 
and  it  ought  to  be  taken  up  from  some  sort  of  a  statistical  stand- 
point— the  mere  fact  of  our  saying  we  are  in  favor  of  it  or  against  it 
does  not  mean  anything,  because  we  speak  then  largely  from  a  per- 
sonal point  of  view,  or  from  the  point  of  view  of  those  we  represent. 
Proper  statistics  should  be  gathered  from  both  sides — those  in  favor 
and  those  against — and  then  the  interests  on  the  other  side,  the  labor, 
ought  to  be  prepared  to  present  its  side  of  the  question,  as  to  what  has 
occurred  under  private  ownership  and  as  to  what  is  occurring.  It  has 
been  charged  in  Congress,  by  those  who  apparently  know^,  that  those 
employed  on  ships  were  suffering  slavery,  and  were  in  the  position  of 
being  put  in  jail,  losing  their  compensation,  or  being  punished  in 
almost  any  way.  Now,  these  things  ought  to  receive  some  considera- 
tion. If  we  are  going  to  have  private  ownership,  we  should  have  it 
under  the  most  searching  restrictions.  The  Government  should  have 
the  fullest  authority  in  the  regulation  of  the  commerce  of  the  seas, 
in  order  that  the  fullest  protection  might  be  given  to  all,  and  if  it  is 
to  be  private  ownership,  a  fair  and  reasonable  allowance  should  be 
assured  to  the  lines  which  are  operating  the  ships  in  order  that  they 
will  have  a  full  financial  success ;  whether  that  be  4,  6,  or  8  per  cent 
is  a  matter  of  indifference;  it  ought  to  be  based  on  some  reasonable 
financiering.  It  ought  to  be  based  on  some  sound  principle,  not  on  the 
fact  that  a  shipping  corporation  is  capitalized  originally  at  a  hundred 
thousand  or  a  million  dollars,  and  then  later  recapitalized  at  two 
million  or  ten  million  dollars,  but  this  basic  fact  ought  to  receive 
proper  consideration  as  to  the  investment,  and  the  watering  of  it  ought 
to  receive  that  consideration  that  matters  of  this  kind  require  and  go 
to  the  botttpm  of  the  sea.  [Applause.] 

Labor  is  interested  in  this  problem,  and  I  believe  that  you  will  find 
organized  labor  ready  to  stand  together  on  this  question.  When  I 
speak  of  organized  labor  as  an  organization,  that  is  the  Avay  I  mean 
it.  Of  course,  there  will  be  individuals  in  the  smaller  organizations 
or  large  organizations  within  this  great  body  of  the  federation 
that  may  not  agree  with  it.  But  I  think  we  leaders  and  the  great 
majority  of  the  men  are  in  favor  of  finance  getting  proper  considera- 
tion. All  we  ask  in  return  is  that  labor  get  that  consideration  that 
is  their  just  due,  if  it  can  not  get  it  from  private  employment,  it  must 
get  it  from  Government-owned  employment,  because,  as  you  know, 
the  Government  owns  and  operates  many  things  and  has  for  years. 
It  has  operated  its  navy  yards  and  arsenals  and  all  its  manufacturing 
for  the  War  and  Navy  Departments  in  these  lines.  It  has  operated 
its  postal  services  and  other  things.  Somebody  said  this  morning 
that  the  question  of  the  railroads  and  some  of  the  other  things  were 
too  large  for  the  Government  to  undertake.  I  do  not  think  there  is 
anything  too  large  for  the  Government  to  undertake  that  a  private 
employer  can  operate ;  I  am  of  the  opinion  that  the  people  as  a  whole 
can  operate  it.  I  do  not  think  that  is  a  justifiable  reason  that  there 
should  not  be  Government  ownership.  I  think  there  should  be  some- 
thing more  reasonable.  I  think  we  are  capable  of  establishing  any- 
thing. We  proved  that  beyond  question  of  doubt  in  the  last  two  years 
when  we  declared  war  and  we  were  topsy-turvy  and  nobody  knew 


43 

where  we  were  at.  We  have  proven  we  can  prepare  for  war  rapidly 
and  successfully,  and  it  is  also  true  that  we  can  prepare  for  peace 
rapidly  and  successfully,  and  we  can  prepare  either  for  Government 
control  or  for  private  control,  but  we  must  do  that  in  a  rational, 
well-thought-out  manner. 

I  say  again  labor  is  willing  and  ready  to  cooperate;  I  think  there 
should  be  sufficient  time  taken  to  such  an  important  question  as  this, 
particularly  when  you  are  dealing  with  this  question  whether  you 
should  owii  it  or  whether  the  Government  should  own  it.  It  should 
be  narrowed  down  to  as  few  men  as  is  possible  to  work  it  out  and 
present  in  a  businesslike  way  later  with  facts  and  figures  to  prove,  as 
a  well-known  Congressman  "said,  "Where  we  are  at,"  and  I  think  we 
ought  to  fully  realize  "  where  we  are  at."  We  are  at  sixes  and  sixes 
just  now ;  millions  of  men  coming  back  from  the  other  side  seeking 
employment,  thousands  and  tens  of  thousands  of  men  out  of  employ  - 
ment,  with  an  apparently  fairly  good  demand  for  employment,  the 
Government  itself  cutting  off  its  appropriations  so  that  some  features 
of  the  Government  have  had  to  go  out  of  business :  some  bureaus  have 
had  to  stop  doing  business,  particularly  the  employment  bureau.  This 
great  question  of  unemployment,  reconstruction,  is  confronting  us. 
This  is  one  phase  of  it.  We  want  to  see  the  ship  industry  live,  thrive, 
and  prosper.  We  want  to  see  the  shipyards  run  to  give  the  men  em- 
ployment, and  we  have  built  up  a  reasonably  good  condition  of  em- 
ployment in  the  shipbuilding  industry,  and  we  want  to  build  up 
a  reasonably  good  condition  of  employment  in  the  ship-operating 
industry.  If  we  have  your  cooperation,  certainly,  with  the  experi- 
ence we  have  had  during  the  past  two  years,  it  ought  to  be  of  service 
to  us  during  this  time.  [Applause.] 

Mr.  HURLEY.  Mr.  O'Connell,  this  conference  is  not  going  to  take 
any  action ;  the  meeting  was  called  for  the  purpose  of  hearing  what 
you  gentlemen — all  of  you,  the  different  groups,  throughout  the  coun- 
try— have  in  mind;  just  to  get  your  views  that  it  may  be  helpful  and 
guiding  to  us  in  taking  steps  for  our  recommendations  to  Congress. 
Congress  will,  of  course,  pass  on  this.  I  am  speaking  of  the  opera- 
tion and  ownership  of  ships. 

Mr.  J.  S.  TAYLOR,  of  the  Chamber  of  Commerce  of  Mobile,  Ala.,  and 
a  delegate  of  the  Mississippi  Valley  Association.  Gentlemen  and 
members  of  the  Congress,  I  am  a  member  of  a  committee  here  from 
the  Mississippi  Valley  Association  that  is  made  up  of  representatives 
from  Chicago.  St.  Louis,  New  Orleans,  Galveston,  and  Mobile ;  Mr.  M. 
W.  Leach  is  the  chairman  of  this  committee ;  he  is  the  proper  spokes- 
man, and  I  will  call  upon  him  to  give  you  our  sentiment  and  our 
opinions. 

Mr.  LEECH.  Mr.  Chairman,  I  have  been  asked  to  act  as  chairman  of 
a  committee  of  the  Mississippi  Valley  Association.  The  members  of 
that  committee  are  Mr.  Edmund  T.  Brookes,  of  Chicago;  Mr. 
Thomas  E.  Smith,  of  St.  Louis;  Mr.  James  S.  Taylor,  of  Mobile; 
Mr.  Samuel  Whaley,  of  New  Orleans;  and  Mr.  George  Seely,  of 
Galveston.  Mr.  Seely,  however,  was  unable  to  attend.  We  are  ap- 
pearing before  your  board  with  a  spirit  of  hearty  cooperation,  feel- 
ing that  your  merchant  marine  problem  is  probably  the  greatest  one 
before  this  country  at  the  present  time,  even  condescending  the  rail- 
road problem. 


44 

Our  committee  has  been  instructed  to  place  before  you  resolutions 
which  were  adopted  at  a  meeting  of  the  Mississippi  Valley  Asso- 
ciation, held  in  Chicago  on  April  20. 

The  resolutions,  which  I  will  read  are  short,  and  I  will  leave  them 
with  you  to  be  put  into  your  record.  They  are  to  the  general  effect 
that  we  are  in  favor  of  ultimate  private  ownership.  We  are  opposed, 
however,  to  immediate  private  ownership.  We  believe,  as  stated  by 
Mr.  Rush  this  morning,  it  should  be  reached  by  successive  stages. 
In  addition  to  the  resolutions  adopted  at  Chicago,  at  a  meeting  of 
our  delegation  this  morning,  we  also  adopted  the  same  resolution 
which  was  adopted  by  the  National  Foreign  Trade  Council.  We 
felt  that  our  thoughts  were  in  entire  harmony  with  them  and  not 
inconsistent  with  their  resolution.  The  resolutions  that  were  adopted 
at  the  Chicago  conference,  after  the  preamble,  read  as  follows : 

The  following  resolutions  relative  to  the  United  States  Shipping  Board 
policies  were  unanimously  adopted  by  more  than  500  delegates,  representing 
some  22  States,  comprising  the  Mississippi  Valley,  in  convention  assembled  in 
Chicago,  Wednesday,  April  23: 

Resolved,  That  the  present  time  is  inopportune  for  the  general  sale  of  the 
ships  constructed  by  the  Emergency  Fleet  Corporation.  They  should  continue 
under  Government  ownership  until  an  American  Merchant  Marine  has  been 
permanently  assured,  necessary  trade  routes  firmly  established,  and  a  personnel 
of  officers  and  men  built  up. 

These  ships  should  be  assigned  on  a  commission  or  bare-ship  or  time  charter 
basis  to  reliable,  financially  responsible  American  firms  not  under  foreign 
influence,  and  whose  Americanism  is  established. 

Furthermore,  that  the  Shipping  Board  vessels  should  be  utilized  to  build  up 
American  foreign  trade  and  allocated  on  a  fair  basis  to  all  American  ports. 

The  Mississippi  Valley  demands  recognition  of  its  Gulf  ports  and  the  assign- 
ment of  ships  of  standard  efficiency,  sufficient  to  move  the  foreign  commerce 
of  the  valley  both  for  export  and  import  through  these  ports. 

I  have  therefore  asked  for  the  consent  of  the  foreign  trade  coun- 
cil's representative  to  file  his  resolution,  which  follows : 

We  urge  the  earliest  possible  completion  of  the  Government's  present  ship- 
building program. 

As  shipbuilding  is  one  of  the  greatest  essentials  for  the  prosperity  of  Ameri- 
can industry,  the  Government  should  immediately  remove  all  restrictions  now 
placed  on  American  shipbuilding  and  permit  the  free  construction  of  vessels 
for  sale  to  foreign  interests. 

The  imperatively  necessary  revision  of  our  shipping,  navigation,  classifica- 
tion, and  measurement  la\vs  should  be  accomplished  without  delay  so  that 
American  vessels  can  be  placed  on  a  more  equitable  basis  of  competitive  operat- 
ing costs  in  foreign  trade. 

While  Government  ownership  and  reasonable  Government  control  of  Ameri- 
can shipping  must  continue  until  some  acceptable  plan  is  devised  for  the  trans- 
fer of  such  tonnage  to  private  ownership — we  are  opposed  to  any  continance 
of  Government  operation,  and  urge  that  consistent  with  recognized  war  emer- 
gency needs  these  Government-owned  vessels  be  allocated  to  suitable  trades 
and  trading  routes  for  operation  by  any  qualified  competent  American  shipping 
enterprise,  under  conditions  of  sale  or  charter  that  will  permit  of  their  sending 
the  American  flag  to  any  port  of  the  world  on  a  fair  trading  competitive  basis 
with  that  of  any  other  maritime  nation. 

We  also  urge  the  immediate  consideration  of  the  necessity  for  establishing 
coal  and  fuel-oil  depots  on  all  the  great  foreign  trading  routes  so  that  American 
shipping  shall  not  be  left  dependent  upon  foreign-owned  facilities  for  such  vital 
service. 

Mr.  J.  S.  Taylor,  whom  you  called  upon  a  few  moments  ago,  has 
some  remarks  to  make,  and  I  hope  you  will  not  let  him  escape. 

Mr.  J.  S.  TAYLOR.  Mr.  Chairman,  Mr.  Leech  flattered  me.  I  cer- 
tainly realize  the  difficulty  of  solving  the  problem  that  is  before  you 


45 

and  our  legislative  bodies  in  disposing  of  the  American  ships.  As  I 
see  it,  however,  when  normal  conditions  are  resumed,  and  we  are  all 
hopeful  that  such  will  be  true  before  any  very  distant  date,  that  we 
are  going  to  be  confronted  with  the  same  conditions  that  existed  be- 
fore the  war.  I  am  a  railroad  man  in  the  traffic  department  in  the 
capacity  of  foreign  freight  agent.  I  have  been  booking  freight  for 
foreign  nations  for  25  years.  I  remember  the  time  that  freight  rates 
on  cotton  from  Mobile  to  Liverpool  were  15  cents;  at  the  same  time 
the  rate  on  cotton  from  Boston  to  Liverpool  was  8  cents.  We  shipped 
our  cotton  from  Mobile,  rail  and  water  to  Boston,  then  booked  it  to 
Liverpool.  At  that  time  the  storage  on  grain  from  North  Atlantic 
ports  in  Liverpool  was  greater  than  the  ship  charges  to  take  it  to 
the  other  side  and  bring  it  back.  We  had  to  pay  that  ruinous  storage. 

I  hope  we  will  never  see  such  a  condition  in  shipping  again,  but  it 
is  not  impossible,  and  we  are  all  working  under  abnormal  conditions 
to-day,  and  if  we  do  not  return  to  normal  in  a  reasonable  time  we 
are  going  to  be  confronted  with  foreign  competition,  and  we  are  not 
going  to  be  able  to  meet  it  unless  we  resort  to  that  obnoxious  word 
in  the  nostrils  of  every  American,  "  subsidy,"  to  keep  our  ships  on 
the  high  seas.  I  believe  that  it  is  admitted  that  a  ship  can  be  built 
in  foreign  countries  cheaper  than  it  can  be  built  in  the  United  States. 
It  can  be  manned  cheaper;  it  can  be  operated  cheaper,  and  if  that  is 
the  case,  how  are  we  going  to  keep  our  flag  on  the  high  sea  in  the 
face  of  that  kind  of  competition?  Ships  are  not  operated  from  a 
sentimental  or  patriotic  standpoint;  they  are  operated  as  a  business 
proposition  just  as  a  shoe  dealer  sells  shoes  or  a  horse  dealer,  horses, 
or  a  grain  dealer  sells  wheat.  He  goes  into  the  business  for  the  profit 
there  is  in  it,  and  if  we  are  going  to  be  confronted  by  the  foreign 
competition  which  will  certainly  come  back — I  don't  see  how  we  are 
going  to  maintain  our  flag  on  the  high  seas  without  resorting  in  some 
way  to — I  hate  to  use  the  word;  I  heard  Senator  Underwood  in 
Mobile  within  the  last  two  weeks,  in  order  to  avoid  the  word  "  sub- 
sidy," advocating  the  resumption  of  a  policy  inaugurated  by  Presi- 
dent Madison  in  1823  to  give  traffic  carried  in  American  vessels  a 
preferential  duty.  That  is  as  rank  a  subsidy  as  you  could  possibly 
inaugurate,  yet  he  did  not  call  it  so.  But  we  must,  in  my  opinion, 
ultimately  resort  to  some  means  of  this  kind  in  order  to  keep  our  flag 
on  the  high  seas. 

Mr.  HURLEY.  I  would  like  to  hear  from  W.  D.  Benson,  of  the 
Puget  Sound  Managers  and  Operators'  Association. 

Mr.  BENSON.  Mr.  Chairman,  I  am  not  prepared  to  discuss  this 
question.  Mr.  Cantelow  is  chairman  of  our  committee  and  I  would 
like  to  have  him  discuss  it. 

Mr.  H.  C.  CANTELOW,  of  the  Puget  Sound  Association  of  Shipping 
Managers  and  Operators,  Seattle,  Wash.  Mr.  Chairman  and  gentle- 
men, Mr.  Benson,  my  colleague,  and  myself  are  here  from  Puget 
Sound.  We  came  from  Seattle  to  attend  this  meeting,  but  we  are 
not  going  into  the  matter  at  any  very  great  length  now.  We  have 
jotted  down  a  few  notes — ideas  that  strike  us,  especially  from  the 
viewpoint  of  a  Pacific  coast  operator  on  trans-Pacific  tonnage,  and  I 
would  be  glad  to  read  these  points  so  that  they  may  be  put  in  the 
record.  I  haven't  them  in  such  a  state  that  I  can  present  them 
except  by  reading.  If  we  dwell  at  too  great  length  upon  Pacific  coast 


46 

operation  it  is  because,  coming  from  that  location,  we  rather  feel 
that  perhaps  the  viewpoint  of  the  Pacific  coast  operators  may  be  lost 
sight  of  by  those  who  are  so  far  removed  from  the  conditions  that 
are  peculiar  to  the  Pacific  coast  operation. 
These  are  the  points  which  we  advocate : 

1.  A  strong  merchant  marine  is  essential  to  the  national  defense 
and  prosperity  of  the  leading  commercial  and  industrial  power  of 
the  world. 

2.  Before  a  strong  merchant  marine  can  be  developed  there  must 
be  "  a  thorough  revision  of  our  navigation  arid  shipping  laws  to  as 
near  as  possible  equalize  competition  in  foreign  trade. 

3.  A  study  of  the  Japanese  merchant  marine  must  be  made  and 
the  cause  of  its  rapid  continuous  growth  must  be  understood. 

During  the  last  four  years  Japan's  merchant  tonnage  has  increased 
25  per  cent.  Her  shipbuilding  power  is  now  increasing  with  enor- 
mous strides.  She  is  determined  to  strengthen  her  commercial  hold 
on  China  and  Siberia.  We  on  the  Pacific  const  know  that  our  great- 
est opportunity  for  trade  expansion  lies  in  th  it  direction. 

Any  revision  of  our  laws  which  does  not  take  into  strict  account 
the  relative  cost  of  operating  in  Pacific  foreign  trade  vessels  under 
our  flag  and  vessels  under  the  Japanese  flag  will  only  half  solve  our 
merchant  marine  problem.  It  must  be  remembered  that  Japan  is 
developing  Chinese  sources  of  steel  supply  in  order  that  she  may  be 
more  independent  of  England  and  America. 

4.  We  favor  the  early  establishment  of  coal  and  oil  bunkering  fa- 
cilities at  Manila.    This  should  be  one  of  the  first  steps  toward  meet- 
ing the  competition  of  foreign  steamers  in  the  Pacific.    We  also  favor 
the  establishment  of  a  free  zone  in  Manila.     Great  Britain  has  ad- 
vantages at  Hong  Kong  and  Japan  at  Kobe  which  can  not  be  met  in 
any  other  way. 

5.  Continuation  of  Shipping  Board  building  program  for  at  least 
one  year,  adopting  types  to  meet  the  needs  of  the  various  trades,  with 
due  regard  for  comfort,  speed,  size,  and  economy  of  operation. 

6.  Opening  of  shipyards  for  private  contracts  without  restriction. 

7.  Government  to  cease  building  merchant  vessels  on  a  date  to  be 
specified;  all  vessels  then  owned  by  the  Government  to  be  sold  to 
private  American  operators,  or,  if  all  are  not  so  absorbed  by  some 
date  to  be  specified,  any  remaining  may  be  sold  to  foreigners. 

8.  We  favor  a  wholly  private  owned  American  merchant  marine, 
but  we  are  not  at  present  ready  to  purchase  Government  ships  nor 
will  we  be,  until  it  can  be  shown  that  the  risk  of  purchase  is  much 
less  than  at  present.     We  must  first  pass  beyond  the  present  read- 
justment period. 

We  are  not  ready  to  enter  into  any  long  term  charters.  The  present 
control  over  our  freight  rates  does  not  effectively  control  the  rates  of 
our  principal  foreign  competitors.  Experienced  trans-Pacific  opera- 
tors can  not  charter  on  a  large  scale  until  this  present  period  of  ab- 
normal and  uncertain  freight  rates  has  passed. 

We  favor  continuing  the  present  management  and  operation  plan 
as  long  as  may  be  found  necessary.  The  compensation  as  now  ar- 
ranged for  managers  and  operators,  is,  however,  inadequate  and 
should  be  increased  enough  to  afford  a  living  income. 

9.  The  fixing  of  foreign  freight  rates  by  the  Shipping  Board  will 
harm,  not  help,  our  development.     The  employment  of   artificial 


47 

methods  in  the  fixing  of  such  rates  should  be  rejected  unless  accom- 
plished by  internationl  agreement.  Any  rate  policy  is  certain  of 
failure  which  does  not  leave  American  operators  free  and  un- 
trammeled,  with  an  even  chance  to  meet  foreign  competition  as  they 
find  it. 

The  American  merchant  marine  will  hold  its  own  in  the  market  of 
the  world  if  it  is  not  bound  and  gagged. 

10.  Small  steamship  companies  should  be  encouraged  and  aided  by 
the  Shipping  Board  to  survive  in  their  chosen  trade.    All  such  small 
bona  fide  shipowners  should  be  protected  as  far  as  necessary  from  any 
unfair  rivalry  of  their  larger  competitor  in  such  trade. 

11.  On  the  other  hand,  powerful  experienced  steamship  organiza- 
tions are  not  /objectionable  as  such,  so  long  as  they  conduct  their  af- 
fairs in  an  open  way.    No  check  should  be  placed  upon  the  growth 
of  a  steamship  company  if  it  is  honest  and  tends  to  promote  legiti- 
mate trade.    British  opinion  has  been  antagonistic  to  combination,  but 
it  is  now  being  rapidly  modified.    The  British  and  Japanese  tendency 
is  toward  the  creation  and  use  of  larger  units  in  foreign  transporta- 
tion.   The  creation  and  development  of  a  host  of  new  and  necessarily 
weak  steamship  concerns  should  be  discouraged  by  the  Shipping 
Board.    Our  foreign  competitors  will  not  "send  boys  to  market." 

12.  Careful  consideration  should  be  given   the    provision    of   the 
shipping  act  and  the  seaman's  act,  that  constructive  recommendations 
for  their  revision  may  be  made  to  Congress,  where  needed  to  give  our 
American  steamship  companies  more  freedom  to  meet  competition  in 
foreign  commerce. 

13.  Competition  for  the  trade  of  the  world  is  to  become  far  more 
intense  than  at  any  previous  time  in  history.     The  American  ship- 
owner and  operator  will  welcome  this  provided  he  is  given  a  fair, 
unhampered  opportunity  to  meet  it  on  even  terms.    American  steam- 
ship men  can  be  trusted  with  as  much  safety  as  any  in  the  world. 
They  must  be  given  an  equal  chance  with  the  steamship  men  of  any 
country  and  their  operators  must  be  as  unrestricted.    Give  them  an 
equal  chance  and  the  steamship  men  of  America  will  rejuvenate  our 
merchant  marine  and  make  it  a  matter  of  national  pride. 

14.  It  is  feared  by  some  that  unrestricted  private  control  would 
lead  to  overcapitalization  of  steamship    companies.     There    is    no 
practical  fundation  for  the  fear.     The  regulation  of  this  may  well 
be  left  to  foreign  competition. 

Mr.  HURLEY.  Capt.  J.  G.  Crowley.  of  the  Coastwise  Transportation 
Co.,  representing  the  Boston  Chamber  of  Commerce.  Boston,  Mass. 

Capt.  JOHN  C.  CROWLEY,  of  the  Coastwise  Navigation  Co.  and  the 
Boston  Chamber  of  Commerce.  Mr.  Chairman  and  gentlemen,  I 
represent  the  Boston  Chamber  of  Commerce  and  the  Coastwise  Trans- 
portation Co.  I  also  represent  the  Boston  Marine  Society,  which  is 
the  oldest  society  in  the  world,  organized  in  about  1744.  I  am  also  a 
ship  captain  and  I  have  been  very  much  interested  to-day  to  hear  the 
different  views  on  this  merchant  marine.  Of  course,  I  don't  know  any- 
thing else  but  merchant  marine,  being  a  sailor  and  having  been  con- 
nected with  this  business  from  boyhood.  I  have  gone  through  all 
stages  of  it,  and  my  opinion  is,  as  my  friend  here,  Mr.  Taylor,  ex- 
pressed it,  if  we  are  going  to  have  a  merchant  marine  we  have  got  to 
have  the  assistance  of  the  Government  in  some  way  or  other  to  com- 
pete with  foreign  nations. 


48 

To-day  at  the  present  rate  of  freight  we  don't  have  to  compete.  The 
rate  of  freight  is  up  in  such  a  substantial  way  that  we  can  operate, 
but  I  think  the  time  is  coming,  as  it  did  before  the  war,  where  our 
freights  are  going  to  drop,  and  then  the  question  is — must  wages  drop 
too?  Is  the  building  and  repairing  going  to  be  lowered  equally  in 
order  that  we  may  compete  with  foreign  commerce  ? 

I  believe  that  the  ships  should  be  owned  by  private  individuals,  and 
as  I  said  before,  they  should  be  assisted  by  the  Government  in  the 
event  rates  drop  as  low  as  they  did  a  few  years  ago,  where  we  can  not 
.compete  with  foreign  nations.  You  may  call  it  a  subsidy,  you  may 
call  it  anything  you  like,  but  there  is  no  reason  why  the  shipowners 
to-day  should  not  be  subsidized,  the  same  as  the  farmers  and  other 
great  manufacturers. 

There  has  been  some  criticism  to-day  regarding  the  sale  of  ships  by 
Mr.  Hurley.  I  think  if  Mr.  Hurley  has  been  able  to  sell  some  of  these 
ships — I.  mean  wooden  ships — he  is  to  be  congratulated,  as  they  were 
built  as  a  war  measure  only,  and  constituted  one  of  the  most  wonder- 
ful things  ever  accomplished.  A  ship  has  just  been  returned  to  me 
from  Bremen.  The  captain  was  telling  me  about  it  in  Baltimore.  A 
German  over  there  said  to  him :  "  Is  this  one  of  the  30  or  40  day 
ships?  "  He  said,  "  Yes."  "  I  don't  see  how  you  did  it! '  He  gave 
them  to  understand  that  we  could  build  ships  and  could  meet  any 
emergency  which  might  arise.  These  wooden  ships  were  not  fitted 
for  our  overseas  trade.  You  all  know  that ;  Mr.  Hurley  knows  that. 
He  knew  it  when  they  were  being  built,  but  if  it  be  possible  for  him 
to  dispose  of  them  at  a  good,  fair  price  he  is  to  be  congratulated.  We 
have  a  number  of  these  large  steel  ships  building  to-day,  for  all  kinds 
of  service,  and  I  trust  that  our  merchant  marine  will  be  up  to  the 
standard  and  that  we  will  see  our  flag  flying  all  over  the  seas. 

EXHIBIT  AAA. 

REPORT   OF   COMMITTEE    ON    MARITIME    AFFAIRS    ON    GOVERNMENT   CONTROL    OF 
SHIPPING  IN  PEACE  TIME. 

FEBRUARY  6,  1919. 
To  the  Executive  Committee  and  Board  of  Directors: 

At  the  meeting  of  the  committee  on  maritime  affairs  held  on  February  6,  1919, 
the  question  of  Government  control  of  shipping  in  peace  time  was  taken  up 
,and  carefully  discussed.  The  committee  favored  a  plan  which  will  be  acceptable 
to  both  the  Government  and  the  purchaser  for  the  release  from  Government 
control  as  soon  as  the  exigencies  of  the  war  will  permit  and  the  turning  back 
of  vessels  taken  over  by  the  Government  and  the  sale  to  private  interests  of 
vessels  owned  or  under  construction  by  the  Government.  Among  the  problems  of 
readjustment  one  of  the  most  important,  it  seems  to  your  committee,  is  the 
question  of  the  future  operation  of  American  shipping. 

Strong  opposition  to  Government  control  of  shipping,  now  that  the  emergency 
is  over,  has  developed  throughout  the  country,  and  it  is  the  unanimous  opinion 
of  the  committee  that  the  Boston  Chamber  of  Commerce  should  take  a  stand 
against  Government  ownership  of  vessels  and  in  favor  of  the  Government  dis- 
posing of  the  vessels  now  owned,  with  the  exception  of  those  required  for 
Government  purposes. 

With  this  idea  in  view  it  was  unanimously  voted  to  recommend  that  the 
board  of  directors  of  the  chamber  indorse  and  forward  to  Washington  the 
following  resolutions  which  express  the  opinion  of  the  committee: 

"  Whereas  the  Boston  Chamber  of  Commerce  has  been  asked  its  opinion  in 
reference  to  the  policy  to  be  pursued  by  the  United  States  Shipping  Board  and 
-the  Emergency  Fleet  Corporation  in  reference  to  the  ownership  and  manage- 
ment of  vessels  in  both  foreign  and  domestic  trade ;  and 

"  Whereas  that  matter  has  been  referred  to  this  committee ;  and 


49 

"  Whereas  the  questions  involved  have  been  carefully  considered ;  now,  there- 
fore, it  is  hereby  unanimously  Resolved: 

"  First.  That  there  should  be  no  Government  ownership  of  vessels  engaged  in 
either  foreign  or  domestic  commerce. 

"  Second.  That  as  speedily  as  may  be,  taking  into  consideration  the  military 
needs  of  the  country,  the  vessels  now  owner  or  operated  under  requisition  by  the 
United  States  through  the  Shipping  Board  or  the  Emergency  Fleet  Corpora- 
tion be  turned  back  to  the  original  owners. 

"  Third.  That  the  vessels  heretofore  built,  or  now  building,  for  the  account 
of  the  United  States  through  the  Shipping  Board  and  the  Emergency  Fleet 
Corporation  be  sold  and  transferred  at  a  fair  market  price  to  such  private 
owners,  concerns,  or  corporations  as  may  be  desirous  of  puchasing  the  same 
to  be  used  in  the  domestic  or  foreign  carrying  trade. 

"  Fourth.  That  the  purchase  price,  or  at  least  a  portion  thereof,  to  be  paid 
for  such  vessels  to  the  United  States  be  allowed  to  be  paid  in  deferred  payments 
covering  a  reasonable  time  and  secured  by  mortgage  or  pledge  of  the  vessels. 

"  Fifth.  That  all  corporations,  firms,  or  individuals  of  the  United  States  of 
America  who  shall  purchase,  own,  or  operate  these  ships  in  the  foreign  trade 
shall  be  exempt  in  respect  to  the  ships  so  owned  and  operated  from  all  Federal 
and  State  taxes  upon  their  capital  stock,  ships,  franchises,  profits,  or  earnings 
for  a  period  of  at  least  20  years. 

"  Sixth.  That  as  soon  as  may  be,  after  the  exigencies  of  the  war  are  over,  all 
ships  engaged  in  foreign  or  domestic  commerce  shall  be  owned,  managed,  and 
operated  by  private  ownership  and  free  from  any  governmental  control. 

"  Seventh.  That  the  La  Follette  law  and  the  navigation  laws  of  the  United 
States  be  forthwith  so  altered  and  amended  as  to  allow  United  States  vessels 
to  compete  in  foreign  trade  on  a  parity  with  the  vessels  of  other  countries." 

It  was  agreed  that  if  the  directors  indorsed  the  resolutions  other  exchanges 
throughout  the  country  should  be  advised  of  the  action  of  the  Boston  Chamber 
of  Commerce,  and  that  the  attitude  of  the  chamber  in  reference  to  the  matter  be 
given  publicity  through  the  press. 

Respectfully  submitted, 

WILLIAM  C.  BREWER,  Chairman. 
EDWARD  E.  BLODGETT, 
JOHN  G.  CROWLEY, 

A.    W.    CHESTERTON,1 

ARTHUR  P.  FRIEND, 
CHARLES  H.  MAYNARD, 
FRANK  B.  MCQUENTEN, 
WILLIAM  H.  RANDALL, 
Committee  on  Maritime  Affairs. 

REFERENDUM  ON  POLICY  OF  THE  FEDERAL  GOVERNMENT  WITH  RESPECT  TO  OCEAN 
SHIPPING  IN  PEACE  TIME. 

MARCH  17,  1919. 
To  the  members  of  the  Boston  Clwmber  of  Commerce: 

At  a  meeting  of  the  committee  on  maritime  affairs  on  February  6  there  was 
a  discussion  of  the  policy  to  be  adopted  by  the  Federal  Government  in  the  con- 
trol of  shipping  during  peace  time.  As  a  result  of  the  discussion,  the  commit- 
tee on  maritime  affairs  submitted  to  the  board  of  directors  a  report  on  the 
subject. 

Under  the  authority  of  a  vote  passed  by  the  executive  committee  on  Febru- 
ary 12,  after  a  consideration  of  this  report,  a  special  committee  (Messrs.  Henry 
E.  Bothfeld,  William  C.  Brewer,  and  Frederick  Foster)  was  appointed  by  the 
president  of  the  chamber  to  draft  a  referendum  for  submission  for  a  mail"  vote 
of  the  members  of  the  chamber  on  the  questions  brought  up  in  the  report. 

On  February  19  this  committee  submitted  a  draft  for  a  referendum,  dividing 
the  subject  into  nine  questions  and  presenting  the  arguments  in  favor  of,  and 
in  opposition  to,  each. 

After  this  draft  had  been  considered  by  the  executive  committee,  it  was 
referred  to  the  board  of  directors,  which,  in  a  meeting  held  on  March  5,  1919. 
voted  to  submit  it  to  the  members  and  also  to  send  the  members  of  the  cham- 

1  Mr.  Chesterton  was  out  of  town  and  therefore  did  not  have  an  opportunity  to  pass 
upon  this  report. 

121034—19 4 


50 

ber.  for  their  information,  the  original  report  made  to  the  board  by  the  com- 
mittee on  maritime  affairs.  These  two  documents  are  submitted  to  you  here- 
with. 

The  questions  involved  have  seemed  to  your  directors  to  be  of  such  import- 
ance as  to  make  it  desirable  that  there  be  an  expression  of  opinion  on  them 
obtained  from  the  members  of  the  chamber. 

In  accordance  with  the  provisions  of  section  3  of  Article  VII  of  the  by-laws, 
the  draft  for  a  referendum  prepared  by  the  special  committee  is  herewith  pre- 
sented with  a  statement  of  arguments  on  both  sides. 

In  order  to  be  counted,  ballots  must  be  received  at  the  office  of  the  secretary 
on  or  before  March  27,  1919.  The  printed  form  of  ballot  must  be  used. 

By  order  of  the  board  of  directors. 

JAMES  A.  MCKIBBEN,  Secretary. 

1.  Should  the  Federal  Government  continue  to  acquire  merchant  ships  in  ad- 

dition to  its  requirements  for  the  transporting,  provisioning,  and  protection 
of  the  armed  forces  of  the  country? 

ARGUMENTS    IN    FAVOR. 

Many  ships  will  be  required  for  the  proper  equipment  of  the  American  mer- 
chant marine.  Probably  not  even  the  release  of  such  ships  as  can  be  spared 
from  the  Government  uses  will  be  adequate  for  this  purpose  and  for  the  re- 
placement of  tonnage  lost  during  the  war.  American  private  capital  has  not 
been  accustomed  in  recent  years  to  investment  in  ships,  and  therefore  no  great 
increase  in  orders  for  ship  construction  on  private  account  can  be  expected.  If 
these  ships  are  to  be  on  hand  when  needed,  it  apparently  will  be  necessary  for 
the  Government  to  order  them.  Moreover,  since  ships  probably  will  not  be  built 
on  private  account  for  American  investors,  and  since  also  few  orders  for  ves- 
sel construction  can  be  expected  from  foreign  investors  if  the  Federal  Govern- 
ment does  not  order  additional  ships  in  the  near  future,  many  of  the  shipyards 
which  have  been  built  in  this  country  during  the  past  three  years  will  be 
obliged  to  cease  operation  on  account  of  lack  of  orders. 

ARGUMENTS  IN   OPPOSITION. 

The  ships  now  under  construction  in  American  yards  are  primarily  designed 
for  military  purposes,  and  most  of  them  would  require  redesigning  in  order  to 
fit  them  for  either  general  cargo  service  or  any  specific  trade.  With  the  war 
emergency  passed,  any  ships  ordered  for  commercial  purposes  ought  to  be  ac- 
curately adapted  to  the  sort  of  business  into  which  it  is  planned  to  put  them. 
The  Federal  Government  is  not  in  a-  position  to  know  with  any  degree  of  ac- 
curacy what  is  called  for,  for  the  equipment  of  merchant  fleets.  If  it  were  to 
undertake  further  shipbuilding,  it  would  be  necessary  for  it  to  work  out  an 
elaborate  program  for  the  ownership  and  operation  of  steamships  continuing 
over  a  series  of  years.  Without  such  a  plan  (which  the  Government,  having 
had  no  experience  in  shipbuilding,  is  not  in  position  to  develop)  the  only 
feasible  means  for  insuring  a  supply  of  ships  adapted  to  the  needs  of  commerce 
is  to  put  ship  construction  on  the  basis  of  private  competition  as  promptly  as 
possible.  The  wholesale  entry  of  the  Federal  Government  into  this  business 
would  discourage  the  private  undertaking  of  shipbuilding  and  ownership  in  this 
country.  Furthermore,  in  all  important  maritime  countries,  steamship  owning 
is  a  private  enterprise  conducted  on  a  private  basis  both  in  the  case  of  line  and 
charter  ships.  The  Federal  Government  of  the  United  States,  if  it  enters  upon 
a  permanent  policy  of  ship  owning,  will  be  obliged  to  foresee  the  results  of  com- 
petition against  whatever  American  private  capital  may  be  invested  and  also 
the  private  investments  of  the  nationals  of  many  other  countries. 

2.  Should  the  Federal  Government  continue  the  ownership  of  merchant  ships 

in  addition  to  the  requirements  for  the  transporting,  provisioning,  and  pro- 
tection of  the  armed  forces  of  the  country? 

ARGUMENTS    IN    FAVOR. 

The  United  States  is  dependent  upon  the  foreign  ownership  of  vessels  con- 
ducting its  overseas  trade.  Private  ownership  of  steamers  is  not  an  attractive 
field  at  this  time  for  the  investment  of  American  capital.  If  the  shippers  of 
the  United  States  are  to  be  freed  from  their  dependence  on  foreign  vessels. 


51 

it  will  be  necessary  for  the  Federal  Government  to  undertake  vessel  owner- 
ship, and  this  is  the  most  favorable  time  for  its  entry  into  this  line  of  business. 

ARGUMENTS    IN    OPPOSITION. 

The  ownership  of  ocean-going  steam  vessels  by  the  Federal  Government  in- 
volves the  whole  problem  of  public  as  against  private  ownership  of  public 
utilities.  There  is  no  hope  for  the  eventual  upbuilding  of  the  American  mer- 
chant marine  on  a  business  basis  if  the  Federal  Government  takes  advantage 
of  this  first  opportunity  presented  in  a  generation  for  the  undertaking  of  ves- 
sel ownership  as  a  commercial  enterprise.  The  Federal  Government,  as  a  war 
measure,  has  invested  in  vessels  a  sum  of  money  too  large  to  be  safely  tied 
up  permanently  in  an  enterprise  unless  it  is  to  be  operated  on  a  profit-making 
basis.  The  ownership  by  the  Government  of  public  utilities  of  this  sort  for 
profit,  under  the  present  circumstances,  apparently  is  not  one  of  the  results 
which  can  reasonably  be  hoped  for. 

3.  Should  the  Federal  Government  continue  the  operation  of  merchant  ships  in 

addition  to  the  requirements  for  the  transporting,  provisioning  and  pro- 
tection of  the  armed  forces  of  the  country? 

AKGUMENTS   IN   FAVOE. 

There  is  an  immediate  and  urgent  need  for  an  American  merchant  marine 
under  purely  American  control  and  operation.  It  probably  would  be  neces- 
sary at  the  outset,  if  this  American  merchant  marine  were  to  accomplish  its 
real  work,  for  many  of  the  vessels  in  it  to  go  on  runs  not  at  present  profitable. 
For  the  time  being,  therefore,  it  seems  wise  to  treat  the  American  merchant 
marine  as  a  whole  and  to  make  the  profits  of  more  profitable  runs  offset  as 
far  as  possible  whatever  may  be  lost  on  the  unprofitable  runs.  This  unity  of 
policy  can  not  be  obtained  under  private  operation. 

ARGUMENTS    IN    OPPOSITION. 

The  operation  of  unprofitable  runs  or  of  vessels  operating  unprofitably  in 
charter  business  by  the  Federal  Government  would  in  the  first  place  result 
in  a  serious  drain  on  the  public  revenues.  In  the  second  place,  it  would  serve 
to  defeat  the  eventual  purposes  so  much  to  be  desired,  namely,  the  upbuild- 
ing of  an  American  merchant  marine  operated  on  a  business  basis  which, 
under  the  circumstances,  appears  to  be  possible  only  by  investment  of  private 
capital.  The  Federal  Government  has  had  no  adequate  experience  in  the  com- 
mercial operation  of  ships.  This  is  an  intricate  and  highly  specialized  busi- 
ness, for  the  conduct  of  which  certain  private  enterprises  are  well  equipped. 
It  calls  for  a  degree  of  resourcefulness  in  quick  shifting  of  plans  and  op- 
erations far  beyond  that  ever  displayed  by  a  Government  agency  or  depart- 
ment either  in  this  country  or  abroad.  The  merchant  marine  is  not  operated 
by  the  Government  in  any  country.  Private  enterprise  has  universally  been 
accepted  as  the  most  expedient  for  conducting  shipping  enterprises.  Govern- 
ment operation  in  this  field  is  an  untried  experiment  offering  small  reason 
to  justify  any  expectation  of  its  success.  Moreover  in  certain  circumstances 
Government  operation  might  lead  to  serious  consequences  both  for  the  Gov- 
ernment and  for  the  merchant  marine.  Suppose,  for  example,  at  the  season 
for  the  movement  of  the  grain  crop,  say,  from  Russia  to  Italy,  it  should  hap- 
pen that  the  official  relations  between  the  United  States  Government  and  that 
of  either  of  these  two  countries  should  be  of  such  nature  that  commercial 
transactions  between  them  might  be  undesirable.  Under  Government  oper- 
ation the  entire  American  fleet  would  be  excluded  from  this  traffic.  This  might 
perhaps  be  an  improbable  case  but  it  serves  to  make  the  point  clear  that  the 
Government  operation  of  ships  does  introduce  an  element  of  complication  into 
the  conduct  of  a  shipping  enterprise,  which  would  serve  as  an  additional 
handicap  to  its  profitable  operation,  and  therefore  either  an  added  drain  on 
the  public  treasury  or  additional  reason  for  higher  freight  rates. 

4.  Should  the  Federal  Government,  as  speedily  as  may  be,   taking  into  con- 

sideration the  military  needs  of  the  country,  turn  back  to  the  original 
owners  the  vessels  now  owned  or  operated  under  requisition  by  the 
United  States  through  the  Shipping  Board  or  the  Emergency  Fleet  Cor- 
poration ? 

ARGUMENTS    IN    FAVOR. 

Many  of  the  vessels  now  controlled  by  the  Federal  Government  are  urgently 
wanted  at  this  time  for  the  resumption  of  private  lines  and  private  charter 


52 

operations.     Nothing  should  be  permitted  to  interfere  with  the  resumption  of 
shipping  business  on  a  private  basis  as  promptly  as  possible. 

ARGUMENTS    IN    OPPOSITION. 

The  Government  control  of  these  vessels,  for  the  present,  at  least,  is  ex- 
tremely desirable  in  order  to  secure  to  American  importers  and  exporters  pro- 
tection against  possible  unfair  discrimination  in  the  expansion  of  their  busi- 
ness. Moreover,  the  protection  of  unprofitable  runs  against  stoppage  would 
be  much  easier  if  these  vessels  are  still  controlled  by  the  Government  than 
if  they  were  turned  back  to  their  original  owners. 

45.  Should  all  vessels  hereafter  built  or  now  building  on  account  of  the  United 
States  through  the  Shipping  Board  and  the  Emergency  Fleet  Corporation 
be  sold  and  transferred  to  such  private  owners  or  concerns  or  corpora- 
tions of  the  United  States  as  may  be  desirous  of  purchasing  them  for  use 
in  the  domestic  or  foreign  carrying  trade? 
<a)  At  a  figure  representing  as  nearly  as  possible  the  cost  of  the  vessels  to 

the  United  States  Government. 
<&)  At  such  prices  as  they  will  bring  on  the  market. 

(,«)    ARGUMENTS    IN    FAVOR. 

These  two  alternatives  involve  the  question  of  policy  of  the  Government 
with  respect  to  the  terms  of  sale  for  the  vessels  under  its  control.  It  is  de- 
sirable that  the  Government  if  it  is  to  withdraw  from  the  steamship  business, 
shall  involve  itself  in  as  little  monetary  loss  as  possible. 

(a)    ARGUMENTS    IN    OPPOSITION. 

At  the  cost  involved  in  the  construction  of  these  vessels  under  emergency 
conditions,  most  of  them  would  represent  a  much  higher  price  than  could  pos- 
sibly be  secured  for  them  in  the  open  market.  The  result  would  be  that  if 
this  policy  were  adopted  by  the  Government,  the  delay  in  the  withdrawal  of 
the  Government  from  the  shipping  business  would  be  almost  indefinite.  It 
would  certainly  last  as  long  as  the  life  of  many  of  the  ships  now  in  service. 

(b)    ARGUMENTS    IN    FAVOR. 

The  quickest  way  for  the  Government  to  withdraw  from  the  business  would 
be  to  offer  the  ships  in  the  open  market  and  sell  them  for  whatever  they  would 
bring.  Many  of  the  vessels  would  require  so  much  remodeling  in  order  to  fit 
them  for  merchant  service  that  their  present  value  would  be  low ;  but  this  ought 
not  to  interfere  with  the  Government  disposing  of  these  vessels  at  whatever 
price  they  will  bring  in  an  open  competitive  market. 

<6)    ARGUMENTS   IN    OPPOSITION, 

The  offering  of  these  vessels  in  the  open  market  with  the  understanding  that 
they  would  be  sold  at  whatever  they  would  bring  would  demoralize  the  market 
price  of  ships  for  many  months.  Practically  all  the  shipyards  would  be  operated 
far  below  capacity,  and  many  of  them  probably  would  be  bankrupted  by  the 
stoppage  of  orders  due  to  the  depression  in  the  ship  market  which  this  action 
would  cause. 

6.  Should  it  be  made  possible  for  purchasers  of  vessels  from  the  Federal  Govern- 
ment to  pay  all  or  a  portion  of  the  price  for  these  vessels  in  deferred  pay- 
ments covering  a  reasonable  time  and  secured  by  mortgage  or  pledge  of  the 
vessels? 

ARGUMENTS    IN    FAVOR. 

A  deferred  payment  plan  would  make  it  possible  for  the  Federal  Government 
to  withdraw  promptly  from  vessel  ownership ;  at  the  same  time  it  would  make 
it  possible  for  comparatively  small  concerns  to  go  into  the  ship  owning  or 
operating  business  and  to  buy  vessels  and  pay  for  them  out  of  the  profits  of 
their  operation. 


53 

ARGUMENTS   IN   OPPOSITION. 

Tlie  Federal  Government  by  an  arrangement  of  this  kind  would  be  drawn  into* 
what  is  virtually  a  money-lending  business,  and  it  would  be  years  before  it  was 
wholly  freed  from  responsibility  and  from  danger  of  loss  in  connection  with, 
these  sales. 

7.  Should  all  corporations,  firms,  or  individuals  of  the  United  States  of  America 

who  may  purchase,  own,  or  operate  ships  solely  under  American  registry 
in  the  foreign  trade  be  exempt  .with  respect  to  the  ships  so  owned  and 
operated  from  all  Federal  and  State  taxes  upon  their  capital  stock,  shipsr 
franchises,  profits,  or  earnings? 

ARGUMENTS  IN   FAVOR. 

The  remission  of  taxes  on  these  vessels  wrould  be  a  material  encouragement  to 
private  ownership  of  vessels  to  be  operated  under  the  American  flag,  and  at  the 
same  time  it  would  not  constitute  a  sufficiently  strong  encouragement  to  put  it 
in  the  class  with  ship  subsidies  or  other  direct  grants  of  money,  involving  serious 
disturbance  of  the  natural  course  of  business. 

ARGUMENTS  IN  OPPOSITION. 

The  remission  of  taxes  by  a  method  such  as  is  suggested,  which  would  virtually 
amount  to  a  subsidy,  would  be  a  disturbing  factor  in, the  resumption  of  the 
shipping  business  on  a  private  basis.  It  would  be  likely  to  lead  to  complications 
with  and  reprisals  from  foreign  Governments  as  an  unfair  handicap  imposed  on 
foreign  vessels  operating  particularly  in  charter  traffic  in  competition  with 
American  craft. 

8.  If  the  exemption  referred  to  in  question  7  should  be  granted,  should  it  be 

given  for  a  fixed  period  of  at  least  20  years? 

ARGUMENTS  IN   FAVOR. 

The  period  of  20  years  is  not  longer  than  is  necessary  in  order  to  make  entry 
upon  the  shipping  business  attractive  to  American  capital  under  the  existing 
handicaps.  Twenty  years  would  cover  a  substantial  period  of  the  life  of  the 
vessels  now  taken  over  from  the  Federal  Government;  and  as  long  as  these 
vessels  constitute  an  important  portion  of  the  fleet  operated  under  the  American, 
flag,  some  sort  of  compensation  for  their  use  should  be  made. 

ARGUMENTS  IN  OPPOSITION. 

The  period  of  20  years  is  too  long  for  intelligent  acceptance  at  this  time. 
Nobody  can  foretell  what  the  conditions  in  the  shipping  business  will  be  in  even 
10  or  15  years ;  and  if  an  undertaking  of  this  sort  is  gone  into  at  all,  it  should 
riot  cover  a  period  longer  than  one  in  which  the  conditions  may  be  assumed  to  be 
approximately  the  same  as  those  of  the  immediate  future. 

9.  Should  the  navigation  laws  of  the  United  States  be  immediately  altered  and 

amended  so  as  to  permit  United  States  vessels  operated  under  the  American 
flag  to  compete  profitably  in  foreign  trade  with  the  vessels  of  other  countries?-' 

ARGUMENTS  IN  FAVOR. 

Numerous  features  of  the  present  navigation  laws  of  the  United  States,  sucfe 
as  some  of  the  regulations  covering  the  number  and  character  of  the  crew,  regu- 
lations concerning  inspection,  and  numerous  other  laws  and  rules  covering  oper- 
ation, make  American  vessels  more  expensive  to  run  than  the  vessels  of  any- 
other  important  ship  operating  country.  This  handicap,  added  to  the  fact  that 
the  vessels  cost  more  to  build,  and  therefore  represent  a  larger  capital  outlay,, 
tends  to  make  freight  and  charter  rates  for  American  ships  higher  than  the- 
rates  which  can  profitably  be  quoted  by  vessels  operated  under  other  flags.  If 
the  United  States  shippers  are  to  secure  the  advantages  of  an  American  merchant 
marine,  it  will  be  necessary  for  this  difference  in  rates  either  to  be  eliminated" 
or  to  be  offset  by  some  artificial  means,  such  as  a  money  compensation  either  to> 
the  shippers  or  the  operators.  In  order  to  avoid  the  adoption  of  artificial  props 
such  as  subsidies,  it  will  be  necessary  to  reduce  the  avoidable  burdens  of  ship 


54 

operation  to  a  minimum.  This  could  be  done  without  an  abandonment  of  those 
features  of  the  present  navigation  laws  designed  to  guarantee  the  comfort  and 
safety  of  the  crew  and  passengers. 

AEGUMENTS  IN  OPPOSITION. 

The  American  navigation  laws  make  American  vessels  in  many  respects  the 
safest  and  most  comfortable  ships  in  the  world,  and  there  should  be  no  abandon- 
ment of  the  policy  which  guarantees  this.  In  fact,  it  is  essential  that  seafaring 
life  be  made  more  than  normally  attractive  at  this  time  in  order  to  draw  men 
into  the  navigation  business  as  compared  with  the  openings  offered  on  shore. 
Moreover,  the  conditions  prevailing  in  labor  circles  of  the  Great  Lakes  (and  the 
fact  that  our  navigation  laws  necessarily  must  apply  in  a  large  measure  equally 
to  Great  Lake  navigation,  coastwise  navigation,  as  well  as  overseas  navigation) 
would  make  it  extremely  desirable  not  to  interfere  at  this  time  with  the  existing 
relations  between  the  Great  Lakes  ship  operators  and  their  employees.  A  gen- 
eral revision  of  the  navigation  laws  would  be  almost  certain  to  precipitate 
labor  opposition  to  the  whole  merchant  marine  program. 

Mr.  HURLEY.  Mr.  Sydney  M.  Hampton,  of  the  Shipowners  Associa- 
tion of  the  Pacific  Coast. 

Mr.  HAMPTON.  Mr.  Chairman,  Mr.  W.  F.  Sullivan,  our  secretary, 
who  is  present,  will  make  such  remarks  as  he  deems  necessary. 

Mr.  W.  F.  SULLIVAN,  Secretary  of  the  Shipowners  Association  of  the 
Pacific  Coast,  San  Francisco,  Calif.  Mr.  Chairman,  it  is  not  my 
desire  to  make  a  speech,  but  I  would  like  the  people  of  the  associa- 
tion to  go  on  record  as  being  opposed  to  Government  ownership  and 
in  favor  of  private  ownership,  for  the  reasons  so  well  set  forth  by 
Mr.  Ring  and  the  two  gentlement  of  the  Foreign  Trade  Council;  I 
also  join  in  and  agree  with  the  statement  made  by  Mr.  Cantelow. 

Mr.  HURLEY.  We  would  like  to  hear  from  Mr.  N".  Sumner  Myrick, 
of  the  United  States  Chamber  of  Commerce,  Washington,  D.  C. 

Mr.  K  SUMNER  MYRICK,  of  the  United  States  Chamber  of  Com- 
merce. Mr.  Chairman  and  gentlemen,  this  is  an  entire  surprise  to 
me,  because  I  intended  to  come  in  here  as  an  attentive  listener  only. 

It  may  not  be  unknown  to  the  gentlemen  here  that  the  Chamber 
of  Commerce  of  the  United  States  has  appointed  a  committee  on 
ocean  transportation  to  take  into  consideration  the  full  question  of 
the  operation  of  a  merchant  marine.  The  committee  is  made  up  of 
two  shipping  men,  two  farmers,  and  other  gentlemen  representing 
various  commercial  interests  throughout  the  country.  We  have 
reached  certain  conclusions  which  have  not  yet  been  made  public, 
and  yet  I  think  I  may,  speaking  personally  and  without  representing 
anyone  but  myself,  state  briefly  some  of  the  salient  points  of  the 
agreement  at  which  we  have  arrived. 

It  seems  to  me  that  the  problem  has  not  yet  been  distinctly  stated. 
We  have,  according  to  the  figures  submitted  by  the  Shipping  Board — 
we  have  a  certain  number  of  ships  of  certain  tonnage,  and  when  we 
consider  the  number  of  ships  and  the  very  large  tonnage,  we  imme- 
diately picture  in  our  minds  a  tremendous  problem  for  solution,  and  I 
should  like  to  point  out  to  you  what  indeed  you  already  know,  but 
perhaps  do  not  often  think  about,  that  the  Shipping  Board  has  three 
different  classes  of  ships.  There  are  the  tankers,  then  there  are  the 
ships  suitable  for  overseas  trade,  of  4,000  tons  and  above,  and  then 
the  third  class,  the  smaller  ships,  both  wood  and  steel. 

Now,  of  course — I  say  "  of  course  " — there  doesn't  seem  to  be  any 
other  way  to  express  it — our  committee  has  reached  the  conclusion 
that  these  ships  should  be  privately  owned  and  operated.  We  believe 


55 

that  the  people  of  the  United  States  have  had  all  the  Government 
ownership  and  operation  of  public  utilities  that  they  can  stand  or 
that  is  desired ;  therefore,  we  look  forward  to  private  control,  private 
ownership,  and  private  operation,  but  the  question  is  raised,  as  it  has 
been  here,  that  if  you  adhere  to  that  policy  and  seek  to  execute  it,  is 
there  capital  enough  in  this  country  for  investment  in  shipbuilding 
property  to  absorb  the  large  number  of  vessels  that  must  be  taken 
over?  Now  let  us  consider  that  phase  of  the  subject  just  for  a 
moment. 

According  to  figures  that  have  been  given  to  me  within  a  week,  the 
Shipping  Board  has  at  the  present  time  267  vessels  of  over  4,000 
gross  tons.  That,  I  suppose,  is  the  smallest-sized  ship  that  is  suitable 
for  overseas  trade.  The  267  ships  represent  about  $1,631,527  gross 
tons. 

The  board  has  on  the  program  664  ships  of  similar  tonnage,  unde- 
livered, of  course,  representing  nearly  4,000,000  tons,  or  a  total  of 
5,587,227  tons.  Now,  if  the  267  ships  which  have  been  delivered,  rep- 
resenting 1,631,000  tons,  were  to  be  sold  at,  say,  $100  per  ton  they 
would  bring  $163,152,700.  If  25  per  cent  of  the  purchase  price  were 
paid  it  would  mean  $40,788,175,  which  is  not  a  very  large  sum  of 
money  for  American  capital  to  absorb. 

Now,  assuming  for  the  moment  that  these  664  undelivered  ships 
would  all  be  constructed  and  all  be.  delivered — a  fact  that  I  suppose 
is  not  generally  accepted — we  shall  then  have^  at  $100  a  ton,  $395,- 
570,000.  Twenty-five  per  cent  of  that  would  be  $98,892,500.  Our 
total  then  would  be  $558,722,700 — rather  a  staggering  sum  of  money 
for  people  that  have  not  been  accustomed  to  investment  in  shipping 
enterprises  to  take  over.  But  when  you  consider  that  if  Mr.  Hurley's 
plan,  and  that  if  any  of  the  other  plans  that  have  been  suggested,  all 
of  which  involve  an  initial  payment  of  25  per  cent,  are  carried  out, 
the  total  payments,  spread  over  a  series  of  years,  will  be  $139,680,675. 
And  that,  again,  does  not  seem  a  tremendously  large  sum  of  money 
for  the  capitalists  of  the  United  States  to  absorb,  especially  when  we 
read  in  the  papers,  as  we  have  in  the  last  day  or  two,  that  one  ship- 
ping company  in  the  United  States  would  presently  have  $135,000,000 
to  invest  in  shipping.  Now7,  assuming  for  the  moment  that  this  is 
the  problem,  how  shall  we  dispose  of  the  ships? 

It  is  an  easy  matter  to  say.  of  course,  "  Dispose  of  them  to  private 
enterprises,"  but  immediately  you  are  confronted  with  these  ques- 
tions :  "  What  private  interests  are  going  to  be  able  to  take  over  the 
ships?"  "Is  there  not  fear  that  there  will  be  created  a  shipping 
trust?  "  '^Will  not  those  who  have  the  most  capital  be  able  to  have 
the  first  choice  of  ships  leaving  those  who  have  less  capital  the  poorer 
quality  of  ships?  " 

Our  committee  have  been  considering  those  questions.  They  have 
reached  this  tentative  conclusion,  namely,  that  throughout  the  coun- 
try, all  up  and  down  the  coast,  Atlantic  and  Gulf  coast  and  Pacific, 
there  should  be  established  shipping  associations,  made  up  of  business 
men  acting  in  cooperation  with  local  chambers  of  commerce  and  trade 
organizations  and  public  authority;  that  those  associations  shall 
determine  the  needs  of  all  of  the  districts  involved;  ascertain  how 
many  ships  are  required  for  that  trade ;  how  they  will  be  taken  over 
by  local  interests,  so  in  that  way  the  fear  of  a  shipping  trust,  the 
fear  of  absorption  by  the  few  strong  individuals,  may  be  avoided. 


56 

I  have  been  led  to  believe  by  some  talks  that  I  have  had  with  repre- 
sentative men  from  various  parts  of  the  country,  the  Atlantic  and 
Gulf  coasts  especially,  that  there  would  be  no  great  difficulty  in 
working  under  these  associations  to  absorb  all  the  tonnage,  represent- 
ing the  overseas  tonnage,  that  the  Shipping  Board  has  or  will  have  in 
pursuance  of  its  program. 

Now  it  has  been  suggested  that  in  view  of  the  facts  that  there 
would  be  difficulty  in  enlisting  the  necessary  amount  of  capital,  that 
the  Government  should  continue  the  ownership  of  ships  and  charter 
them  to  private  individuals.  Well,  now,  it  seems  to  me  there  are 
various  reasons  why  that  policy  is  not  the  proper  one  for  our  national 
interests.  In  the  first  place,  from  the  governmental  point  of  view, 
and  the  business  point  of  view,  the  time  to  sell  anything  that  you  have 
to  sell  is  when  there  is  a  market  for  it,  and  there  is  to-day  a  market 
for  ships.  To-day  men  are  willing  to  invest  their  money  in  ships. 
What  the  conditions  will  be  two  or  three  or  four  years  hence  when  the 
Government  ceases  to  operate  or  to  own  ships  under  private  charter  I 
don't  think  anyone  would  undertake  to  say.  I  do  think,  however,  that 
it  is  safe  to  assume  that  when  all  the  shipyards  of  the  world  are  going  at 
ships  as  they  will  be  probably  within  two  years,  there  is  bound  to  be 
a  surplus  of  tonnage  to  meet  the  requirements  of  the  world's  com- 
merce. When  that  day  arrives  it  will  be  impossible  for  the  Govern- 
ment to  dispose  of  the  ships  at  the-  price  which  is  now  obtaining. 

Again,  if  we  are  going  to  have  a  merchant  marine,  the  sooner  we 
get  it  the  more  efficient  it  is  likely  to  be.  It  must  be  remembered  that 
it  takes  time  to  establish  relations  for  a  successful  shipping  business. 
Moreover,  it  requires  capital.  Men  who  are  not  sure  of  themselves 
and  sure  of  their  future  in  the  shipping  business  will  not  be  inclined  to 
invest  the  money  necessary  to  a  full  development  of  their  business. 
It  is  only  those  who  have  established  themselves,  who  have  put  at 
stake  a  certain  amount  of  their  capital,  who  can  be  relied  upon  to 
carry  on  the  shipping  business.  Therefore,  1  suggest,  the  longer  the 
time  is  delayed  when  private  ownership  goes  into  effect,  the  longer 
the  time  will  be  before  we  shall  have  an  efficient  merchant  marine. 

Of  course,  Mr.  Chairman  and  gentlemen,  it  is  understood  that  the 
few  suggestions  I  have  made,  I  am  speaking  entirely  from  a  personal 
point  of  view.  I  have  no  right  to  speak  for  the  Chamber  of  Com- 
merce of  the  United  States,  because  the  chamber  has  but  one  method 
of  making  effective  its  determination  and  that  is  through  a  referendum 
of  its  constituent  organization. 

Perhaps  I  might  be  permitted  to  add  a  single  word  to  what  I  have 
said.  That  is  this :  Assuming  for  a  moment  that  if  an  effoj-t  is  made 
to  sell  these  ships,  and  it  is  not  believed  successful,  so  that  the  Govern- 
ment has  on  its  hands  a  certain  amount  of  overseas  tonnage,  that  ton- 
nage can  still  be  chartered  or  it  can  be  chartered  with  the  purchases 
to  those  who  have  established  themselves  in  business  and  have  invested 
their  capital  in  it.  [Applause.] 

Mr.  STEVENS  (chairman  pro  tempore).  Mr.  C.  H.  Gustafson,  of 
Farmers'  Union,  Nebraska. 

Mr.  GUSTAFSON.  Mr.  Chairman  and  gentlemen.  I  was  asked  to  come 
here  and  participate  in  this  conference.  I  did  not  have  an  oppor- 
tunity to  take  a  referendum  vote  among  the  members,  farmers,  whom 
I  represent,  before  coming  here,  but  I  feel  certain  that  I  am  speaking 
lor  a  number  of  farmers  in  the  few  remarks  that  I  expect  to  make. 


57 

I  have  been  very  much  interested  in  listening  to  this  discussion  so 
far.  and  I  think  that  there  has  been  very  few  things  said  that  have 
been  proven  with  any  facts  or  figures.  Most  of  the  remarks  have  been 
"  I  am  for  "  or  "  I  am  against  " — mostly  "  I  am  for  private  owner- 
ship." 

Now,  I  want  to  tell  you  I  am  not  for  private  ownership  at  this  time. 
I  want  to  say  that  I  am  not  committing  myself  as  entirely  at  all  times 
in  favor  of  Government  ownership  of  everything.  I  believe  that 
when  the  Government  was  required  to  take  charge  of  this  matter  in  a 
time  of  distress  and  emergency  and  proved  themselves  efficient  in  doing 
so,  that  we  should  give  the  Government  ample  opportunity  to  prove 
under  normal  conditions  what  they  can  do.  I  sincerely  hope  that  this 
matter  will  not  be  decided  at  once,  but  that  time  will  be  given  the 
Government  to  demonstrate  to  the  people  of  this  country  whether  they 
can  operate  a  merchant  marine  successfully  or  not.  I  don't  believe  at 
all  in  this  argument  that  the  Government  can  not  do  what  individuals 
can  do.  That  sounds  kind  of  funny  to  me.  The  very  same  men  that 
are  conducting  the  business  or  the  affairs  under  private  ownership 
might  be  the  same  men  that  will  do  so  under  Government  ownership^ 
and  how  anyone  can  argue  that  they  would  not  be  as  efficient  in 
operating  these  several  activities  under  Government  ownership  as 
they  would  under  private  ownership  I  can  not  understand.  Now,  if 
that  was  a  fact,  why  did  the  Government  take  over  those  things  when 
it  was  necessary  to  get  the  most  and  best  efficiency  possible.  There  must 
have  been  a  bad  act  of  the  Government.  Why  didn't  they  leave  it  to 
private  individuals  when  they  needed  the  best  that  could  be  gotten  ?  I 
think  that  it  is  generally  believed  that,  for  instance,  the  working  people 
would  be  fully  as  glad  or  fully  as  willing  to  work  for  the  Government 
as  they  would  for  corporations  of  any  kind.  And  I  am  morally  certain 
that  they  would  be  as  willing  to  do  the  best  they  could  when  working 
for  the  Government  as  against  working  for  individuals,  and  probably 
more. 

Xow,  I  represent  a  farmers'  cooperative  business  organization  which 
represents  a  good  many  millions  of  dollars'  worth  of  business  a  year, 
and  we  handle  a  good  many  thousand  cargoes  of  farmers'  products,  as 
well  as  manufacturers'  products,  in  a  month.  I  have  failed  to  observe 
any  more  complaints  during  war  times  as  regards  service  than  before, 
and  I  feel  sure  that  when  the  smoke  blows  away  the  people  will  under- 
stand a  little  better  just  what  the  Government  had  to  put  up  with. 
This  great  bugaboo  of  the  inefficiency  of  the  railroads  is  going  to  be 
cleared  up  considerably,  and  a  good  many  people  that  have  expressed 
themselves  without  thinking  will  change  their  minds. 

Now,  it  has  been  pointed  out  here  to-day  that  freight  rates  have 
been  advanced  about  15  per  cent,  and  that  we  have  a  large  deficiency 
to  meet.  I  want  to  ask  all  of  you  if  the  average  increase  in  prices 
of  everything  has  not  been  a  good  deal  more  than  has  been  the  increase 
on  freight  rates,  including  the  deficiency  that  we  have?  I  think  if 
you  will  take  your  pencil  and  paper  and  figure  it  out  that  you  will 
find  it  is  much  more.  I  believe  I  am  right  in  that  statement.  Now, 
the  greatest  interests  that  I  have  in  this  matter  from  the  viewpoint 
of  representing  the  organization  that  I  do  is  this :  That  we  are  doing 
cooperative  buying  and  selling  and  we  are  expected  to  increase  this 
and  we  are  increasing  it  from  month  to  month,  and  some  day  we  may 


58 

be  able  to  go  into  grain  and  meat  business  to  such  an  extent  that  we 
could  fill  a  ship  load  of  that  product,  send  it  to  foreign  countries, 
and  I  believe  that  the  members  of  our  association  would  rather  take 
chances  in  getting  fair  treatment  with  the  Government  owning  the 
ships  than  they  would  with  those  of  privately  owned  corporations. 
At  least  that  has  been  our  experience  in  the  past. 

When  I  applied  for  a  membership  at  the  different  stockyards  in 
this  country  to  do  cooperative  selling  and  buying  in  live  stcek,  our 
associations  were  turned  down.  We  were  not  permitted  to  buy  at 
the  regular  going  price  a  membership  on  these  different  exchanges. 
When  I  applied  on  behalf  of  our  organization  for  membership  on  the 
grain  exchanges  we  received  the  same  reply.  We  could  not  buy  at 
the  regular  going  prices  any  membership.  '  And  a  good  many  other 
similar  experiences  I  could  relate  this  afternoon  which  would  prove 
to  you  that  we  would  be  more  willing  to  deal  with  the  Government 
than  with  privately  owned  corporations. 

They  are  opposed  to  our  method  of  cooperation  because  there  is 
no  profit  to  the  individual.  The  profit  goes  to  each  individual  ac- 
cording to  the  amount  of  business  done  in  buying  and  selling  and 
there  is  no  individual  who  would  reap  benefits  from  somebody  else's 
service  of  production.  That  is  something  which  the  business  world 
to-day  is  fearful  of,  and  they  are  going  to  do  everything  they  can  to 
block  any  efforts  along  that  line.  I  believe  if  they  can  get  control 
of  the  shipping  that  it  will  be  a  great  advantage  to  them  to  have 
that  control,  and  to  exert  their  efforts  to  block  this  oncoming  new 
system  of  doing  business,  namely,  the  cooperative  system.  I  want 
to  repeat  again  that  while  I  have  not  had  the  opportunity  to  call 
our  membership  together  I  know  that  I  am  speaking  for  thousands 
and  tens  of  thousands  of  farmers  in  the  United  States  when  I 
recommend  that  you  do  not  turn  over  this  Government  property 
which  the  Government  has  acquired  at  this  time  but  give  the 
American  people  ample  time  to  think  this  over  and  act  more  care- 
fully. I  don't  know,  Mr.  Chairman,  that  I  have,  anything  further 
to  say  at  this  time.  I  would  be  very  glad  to  answer  any  questions 
if  they  are  put.  I  thank  you  for  the  opportunity. 

Mr.  HURLEY.  Is  there  any  one  here  who  would  like  to  ask  Mr. 
Gustafson  any  questions?  (No  response.) 

Mr.  SAMUEL  WEIL,  of  the  foreign  trade  bureau  of  the  Association 
of  Commerce  of  New  Orleans : 

Mr.   WEIL.  Mr.   Chairman,  the  chairman  of  our  committee  has 

fiven  you  the  result  of  our  deliberations  as  to  our  opinion  on  the 
Liture  of  the  Shipping  Board's  policy  for  the  operation  of  the  mer- 
chant marine.  We  are  not  opposed  to  private  ownership  but  to 
private  ownership  to  come  with  the  future  working  of  the  board  at 
a  time  when  it  will  be  of  more  benefit  to  the  public  than  to  the 
Government.  The  only  point  I  wish  to  add  to  that  which  has  al- 
ready been  referred  to  by  the  chairman  of  our  delegation  is  that  1 
read  in  the  paper  a  few  days  ago  that  the  chairman  of  the  Senate 
Committee  on  Merchant  Marine  is  preparing  a  bill  for  the  purpose 
of  selling  these  ships.  He  is  going  to  recommend  that  ships  under 
3,500  tons  be  sold  to  foreigners.  I  wish  to  enter  my  protest  against 
any  ships  being  sold  to  foreigners  and  ask  that  consideration  be 
given  providing  for  the  sale  of  these  ships  to  American  citizens  only 


59 

so  that  they  may  be  operated  for  the  general  good  of  the  country 
These  ships  under  3,500  tons  may  be  employed  in  the  food  trade  be 
tween  our  southern  ports  and  Central  America.  We  have  been  a\ 
the  mercy  of  the  Norwegian  shipping  interests  for  many  years  ana 
it  would  be  a  great  benefit  to  us  if  these  ships  should  be  sold  to  re- 
main in  the  hands  of  Americans. 

Mr.  HURLEY.  Do  you  refer  to  wooden  ships? 

Mr.  WEIL.  No,  sir;  steel  ships:  only  steel  ships. 

Mr.  HURLEY.  You  don't  object  to  wooden  ships  being  sold  to 
foreigners,  do  you? 

Mr.  WEIL.  No,  sir;  I  don't. 

Mr.  HURLEY.  Mr.  Atkeson,  of  the  National  Grange. 

Mr.  ATKESON.  Mr.  Chairman  and  gentlemen  of  the  conference,  if 
I  could  have  found  any  way  of  escaping  without  being  called  upon 
for  a  speech  I  should  have  sought  that  opportunity.  I  may  say. 
with  some  justification,  that  I  represent  a  class  of  our  people,  of  our 
citizenship,  which  is  more  important  to  the  American  Republic  than 
any  other  class  as  far  as  service  is  concerned — the  people  who  feed 
the  Nation  and  who  help  to  feed  the  other  nations  of  the  earth ;  and 
in  a  way,  we  have  been  giving  some  attention  to  this  question  of 
operation  of  our  merchant  marine.  And  I  happen  just  now  to  be  a 
representatives  of  the  oldest  farmers'  organization  in  existence. 
Fifty-three  years  ago  in  this  Capitol  city  this  farmers'  organization 
was  created  and  for  53  years  it  has  continued  to  function  and  its 
numerous  subordinate  organizations  in  its  county  and  State  organi- 
zations and  through  its  delegated  representatives  in  its  national  or- 
ganization. It  has  a  bona  fide  paid-up  membership  of  nearly  700,000 
producing  farmers  and  I  claim  to  represent  nobody  else  on  the  face 
of  this  earth  except  the  people  in  that  organization  and  other  people 
who  may  be  in  accord  and  harmony  with  our  views. 

I  regret  very  much  not  to  be  able  to  say  that  I  represent  all  the 
farmers  or  that  all  the  farmers  of  the  Nation  are  in  harmony  with 
this  organization,  and  that  all  of  them  are  in  harmony  with  me/  This 
organization  has  been  a  school  of  economics.  It  has  not  been  the 
product  of  any  sensationalism,  any  emotionalism,  or  any  other  influ- 
ence. It  has  been  the  deliberate  substantial  development  after  a 
long  series  of  years  and  within  the  last  six  months  it  has  established 
in  this  city  an  official  representative  body,  and  it  was  persuaded  to 
establish  that  representation,  first,  that  its  views  might  be  specifically 
and  definitely  presented  to  conferences  like  this,  to  Members  of  Con- 
gress and  to  anybody  else  on  the  face  of  the  earth  who  might  care 
to  know  what  we  thought  about  the  basic,  fundamental  principles  that 
affect  a  large  citizenship  and  our  great  Nation's  welfare.  And  it 
was  thought  further  necessary  that  this  organization  have  this  oppor- 
tunity, that  it  might  not  be  misrepresented  by  anyone  at  any  time 
and  we  have  tried  to  make  our  Members  of  Congress  understand  that 
we  are  not  lobbying,  that  we  are  here  to  talk  over  problems  which 
concern  American  agriculture  and  to  confer  with  anybody  and  every- 
body that  wants  to  confer  with  us  and  then  to  cooperate  with  any- 
body and  everybody  with  whom  we  may  agree  in  presenting  the 
proposition  that  we  have  deliberately  believed  to  be  for  the  best 
interests  and  willing  to  admit,  first,  for  American  agriculture  and. 
secondly,  for  the  American  citizenship,  as  the  basic  proposition  of 


60 

this  organization  for  the  greatest  good  to  the  greatest  number  of  all 
of  our  people. 

I  asked  Mr.  Hurley  this  morning  not  to  call  upon  me,  because  I 
thought  maybe  my  conscience  would  be  better  justified  if  I  were  to 
sleep  over  it,  after  hearing  these  other  gentlemen.  I  do  not  know 
whether  I  have  followed  expectations,  but  at  the  noon  hour,  realizing 
that  I  was  liable  at  any  time  to  be  up  against  this  proposition,  I  put 
on  paper  a  few  statements  that  I  now  present  for  the  records  of  this 
conference. 

As  a  question  for  academic  discussion,  there  seems  to  be  but  one 
side  to  the  question  of  having  a  merchant  marine.  We  all  agree 
that  this  great  Nation  ought  to  have  the  greatest  merchant  marine 
of  any  nation  in  the  world.  We  are  ready  to  vote  unanimously  for 
that  ideal — as  an  ideal. 

It  is  not  an  ideal  which  confronts  us,  but  a  stern  material  fact. 
If  we  are  to  have  a  merchant  marine  we  must  determine  how  we  are 
going  to  get  it,  who  shall  own  and  operate  it,  and  who  shall  pay 
the  bills.  There  are  lots  of  luxuries  in  this  world  which  people  would 
like  to  have,  but  when  it  comes  to  paying  for  them,  that  may  be 
another  story.  A  merchant  marine  would  be  a  luxury  to  us,  and  the 
question  is  whether  we  are  willing  to  pay  a  luxury  price  for  it.  It  is 
all  very  fine,  to  have  the  "  Stars  and  Stripes  "  waving  on  ships  in  every 
port  of  the  world,  as  Chairman  Hurley,  of  the  Shipping  Board,  tells 
us,  but  are  the  American  people  ready  to  go  down  in  their  own  pock- 
ets to  keep  the  flag  flying  there?  If  they  are,  then  the  problem  is 
solved  and  it  will  be  a  very  simple  matter  to  have  as  big  a  merchant 
marine  as  we  want  to  pay  for. 

Our  country  seems  to  have  become  nauseated  with  the  idea  of  Gov- 
ernment operation  of  anything,  with  all  the  stagnation  that  comes  with 
red  tape  and  bureaucracy.  We  certainly  have  had  enough  of  privately 
owned  and  Government  operation  of  utilities.  In  order  to  reduce  the 
deficit,  the  Shipping  Board  has  proposed  to  charge  off  a  billion  dollars 
which  somebody  will  have  to  pay,  which  somehow  will  be  spread 
over  the  taxpayers.  Some  Government  owned  ships  have  been  sold 
to  private  concerns  below  the  cost  of  construction,  and  the  "  dear 
public  "  pays  the  bill.  It  has  been  indicated  that  some  steamer  routes 
will  not  prove  profitable  and  this  will  have  to  be  made  up  by  a  sub- 
sidy of  some  kind,  which  the  people  will  have  to  pay.  Senator  Jones, 
who  is  chairman  of  the  Commerce  Committee  of  the  Senate,  is  quoted 
as  saying: 

An  adequate  merchant  marine  is  an  imperative  need  of  the  United  States, 
not  only  as  a  part  of  our  commerce  and  transportation  system,  but  also  as  a 
part  of  our  national  preparedness. 

He  adds, 

We  shall  never  again  be  so  utterly  lacking  in  those  things  so  essential  to  our 
national  safety  as  we  were  at  the  outset  of  the  war. 

Senator  Jones  takes  the  stand  that  if  the  people  are  to  foot  the 
bill  for  the  merchant  marine  anyway  the  best  plan  is  for  the  Govern- 
ment to  retain  the  ships.  He  says  these  ships  belong  to  the  people. 
If  we  are  to  lose  money  by  their  operation  we  should,  in  my  judgment, 
prefer  to  lose  it  in  operating  the  ships  themselves  rather  than  to  sell 
them  at  a  loss  and  to  see  private  capital  enrich  itself  by  their  opera- 
tion. 


61 

He  goes  on  to  say  that  we  should  adopt  a  system  of  discriminating 
duties  to  foster  our  ships.  That  is,  we  should  allow  lower  duties  on 
goods  imported  in  American  ships  than  in  foreign  ones.  This  policy 
is  necessary,  he  says,  in  order  to  insure  return  cargoes  for  our  ships, 
otherwise,  though  we  might  show  preference  to  our  own  ships  by 
loading  them  with  goods  for  export,  we  could  not  force  the  people  of 
other  countries  to  patronize  our  lines,  and  .the  only  way  to  induce 
them  to  do  so  would  be  to  make  concessions  to  them.  Of  course, 
this  is  only  our  old  friend  "  subsidy  "  in  another  disguise,  and  the 
people  would  only  be  putting  in  the  one  pocket  that  which  they  took 
from  the  other,  but  it  would  insure  us  a  merchant  marine,  and  that 
is  what  is  wanted.  This  preferential  treatment  for  American  ships 
has  been  approved  by  both  political  parties,  Senator  Jones  points 
out.  He  urges  that  the  whole  question  should  be  approached  from  a 
high  nonpartisan  standpoint  and  provided  for  without  delay. 

One  of  the  most  serious  questions  is  how  our  ships  are  going  to 
compete  with  ships  made  and  manned  by  lower-priced  Japanese  and 
other  oriental  labor.  We  already  have  laws  which  impose  high 
standards  of  wages  and  conditions  of  labor  on  American  ships,  but 
we  can  not  impose  these  conditions  of  labor  on  Japanese  ships,  for 
it  would  be  no  more  just  for  us  to  lay  down  these  conditions  for 
Japan  than  it  would  be  for  Japan  to  declare  them  for  us. 

I  was  courteously  asked  by  Mr.  Hurley  to  "  attend  these  discussions 
and  give  us  your  views  from  the  farmers'  standpoint."  It  might  be 
easier  to  give  my  views  from  the  farmers'  standpoint  than  to  give 
the  farmers'  views  from  my  standpoint,  but  I  am  in  pretty  close  touch 
with  the  working  producing  farmers  of  this  country,  and  while  I 
would  not  assume  to  speak  for  all  of  them,  I  do  not  hesitate  to  say  that 
I  believe  a  large  majority  of  them  at  this  time  are  opposed  to  any 
form  of  subsidy ;  they  do  not  favor  Government  ownership  and  opera- 
tion ;  they  are  opposed  to  Government  ownership  with  private  opera- 
tion; they  believe  that  our  merchant  marine  should  be  and  can  be 
developed  by  private  capital  and  operated  more  economically  and 
efficiently  by  private  owners  than  by  the  Government,  and  therefore 
they  should  be  so  owned  and  operated,  but  under  the  strictest  pos- 
sible Government  control  compatible  with  the  public  welfare  and  the 
best  interests  of  all  concerned. 

They  further  believe  that  the  time  has  come  when  Congress  should 
adopt  a  definite  and  specific  policy  in  regard  to  our  merchant  marine 
and  put  it  into  operation  just  as  soon  as  possible  and  give  it  time  to 
demonstrate  by  experience  whether  or  not  changes  or  modifications 
are  necessary. 

There  is  a  growing  conviction  among  our  farmers  that  the  Govern- 
ment should  keep  out  of  all  business  except  so  far  as  may  be  neces- 
sary to  protect  the  public  against  every  form  of  injustice.  [Applause.] 

Mr.  HURLEY.  Before  we  adjourn  I  want  to  call  on  Mr.  J.  H.  Ros- 
seter,  of  San  Francisco,  and  the  director  of  operations  of  the  United 
States  Shipping  Board.  [Applause.] 

Mr.  ROSSETER.  Gentlemen,  as  a  foreword,  I  would  like  to  impress 
upon  you  this  one  fact :  That  entering  into  a  conference  of  this  char- 
acter, where  we  are  to  discuss  from  the  standpoint  of  different  in- 
terests this  great  question  of  American  merchant  marine,  we  should 
come,  first,  openminded,  and,  secondly,  with  mutual  confidence.  In 


62 

the  day's  proceedings  of  this  conference,  I  have  looked  with  pleasant 
anticipation,  particularly  to  see  the  agrarian  representatives,  because 
it  happens  every  day  here  in  Washington  I  see  shipping  men,  I  see 
manufacturers,  I  see  representatives  of  labor,  but  so  far  as  the 
farmer's  interest  is  concerned  there  has  been  no  one  coming  to  me 
with  their  viewpoint  or  with  their  troubles.  I  am  tremendously  im- 
pressed with  the  great  importance  this  question  bears  to  the  farmer. 
Therefore,  it  was  with  some  disappointment.  I  confess,  that  the  first 
farmer  representative  this  morning  began  with  a  flatfooted,  firm,  and 
irrevocable  stand  on  questions  which  we  were  later  to  debate.  I  trust 
that  as  we  proceed  that  that  influence  will  gradually  disappear,  be- 
cause that  is  really  the  benefit  we  get  out  of  a  conference  of  this  char- 
acter— to-  have  an  exchange  of  views. 

Next  to  that,  comes  the  importance  of  confidence.  Much  has  been 
said  about  the  Government,  as  against  private  operation.  I  have 
rather  pronounced  views  on  the  question,  for  the  reason  that  I  have 
been  daily  here  in  Washington  for  nine  months,  struggling  as  best 
I  could,  but  very  ineffectually,  I  will  confess,  with  this  complicated 
problem  of  ship  operation.  My  viewTs,  therefore,  are  formed  some- 
what definitely  on  that  question,  but  I  am  not  thinking  of  it  to  the 
disregard  of  public  interest.  I  am  not  thinking  of  it  as  setting  up 
private  interest  to  the  advantage  of  public  interest,  and  to  the  detri- 
ment of  the  man  in  the  field,  or  the  man  in  the  mountains  or  the  man 
in  the  street.  In  fact,  quite  to  the  contrary.  I  am  thinking  of  it  as 
an  agency  to  accomplish  what  every  one  in  this  country  desires,  and 
that  is  the  perpetuation  of  our  merchant  marine;  that  we  may,  by 
wise  council,  formulate,  develop,  and  put  into  being  and  operation 
a  project  which  the  old  maritime  nations  in  the  world  have  previously 
deemed  it  impossible  for  us  to  do. 

They  are  very  confident  in  that  opinion ;  more  confident  and  more 
widespread  in  the  opinion  than  public  opinion  would  give  you  to 
understand,  and  there  is  very  good  reason  for  it. 

For  years  in  domestic  interest  and  enterprise,  we  developed  our 
country,  built  up  our  country  and  our  towns  and  railroads  and  tele- 
phones and  public  service  corporations  of  all  characters,  and  we 
paid  no  heed  at  all  to  shipping,  with  the  result  that,  unfortunately, 
when  the  war  broke  out,  the  real  shipping  community  of  the  United 
States  might  have  been  enumerated  in  two  figures.  Then,  of  course, 
when  that  period  of  great  inflation  of  rates  came — and  that  is  the 
principal  question  the  farmer  looks  on  with  suspicion — he  thinks 
that  if  the  Government's  hand  is  removed  and  that  Government 
control  is  no  longer  exercised,  that  promptly  we  will  have  a  return 
of  the  inflated  rates  of  the  war.  I  think  that  theory  can  be  dismissed 
by  saying  that  following  the  war  international  competition  will 
alone  guarantee  such  rates  of  freight  that  commercial  operation  of 
ships  will  be  a  very  difficult  and  a  very  serious  problem.  There  will 
be  no  chance  of  inflation  and  no  chance  of  high  rates;  there  will  be 
more  ships  in  this  business,  and  you  will  find  again  the  relations  of 
Europe  coming  here  and  seeking  your  support,  which  in  the  past 
you  might  gladly  have  given  them,  but  you  are  entering  upon  an 
emergency  which  you  will  find  without  your  own  experience  in  trans- 
portation. 

In  the  operation  of  ships  many  points  have  been  raised  here  and 
abroad;  much  stress- has  been  put  on  the  difference  in  wages;  the 


63 

difference  in  the  manning  and  the  feeding  requirements  of  our  ships 
as  compared  with  the  foreigners.  Several  of  the  gentlemen — Mr. 
Crowley,  in  particular,  made  a  very  interesting  statement  as  to  what 
we  should  do ;  representatives  of  the  Pacific  coast  spoke  of  the  neces- 
sity of  fuel  oil  stations,  of  the  importance  of  a  free  port  in  the 
Orient  to  offset  Hongkong — these  and  many  other  things  are  abso- 
lutely true.  We  have  put  ourselves  seriously  to  the  problem  of  ad- 
justing our  home  conditions,  including  the  facilities  of  our  ports. 
We  have  tried,  as  far  as  we  could,  to  build  up  a  broader  organization 
of  shipping  people  and  there  are  some  good  results  Avhich  have  ap- 
peared as  well  as  bad.  The  large  cost  which  is  involved  in  the  matter 
of  return  cargoes  and  the  treatment  of  our  ships  at  foreign  ports  is 
a  problem  with  which  we  have  not  dealt  yet  at  all.  You  can  under- 
stand when  we  are  loading  a  ship  at  a  port  in  the  United  States  we 
have  pretty  definite  control  of  the  cargo  and  the  agency  in  whose 
control  the^ship  is  placed  and  the  captain  and  all  the  details  of  opera- 
tion, and  then  the  ship  leaves  and  she  goes  to  a  foreign  colony;  the 
captain,  good  as  he  may  be,  is  quite  powerless  when  he  finds  the 
agent  has  no  particular  facilities,  no  lighters,  no  wharves,  or  on  the 
other  hand,  is  more  interested  in  the  service  of  steamers  of  another 
flag,  and  he  is  quietly  put  off  from  day  to  day,  delaying  his  discharge, 
and  then  it  comes  to  the  matter  of  securing  homeward  cargo,  and  he 
is,  on  every  hand,  the  natural  victim  of  intrigue  and  the  policy  of 
self-preservation.  A  man  particularly  interested  in  any  line  is  nat- 
urally not  expected  to  give  our  ships  the  best  of  the  bargain. 

We  have,  in  this  whole  shipping  problem,  the  greatest  opportunity 
that  was  ever  given  a  nation.  We  have  created  a  large  fleet  of  ships — 
unbalanced,  if  you  will,  but  that  can  be  corrected  by  changing  our 
type  and  changing  our  style  of  ship — and  now  we  are  endeavoring 
to  decide  how  we  shall  proceed  to  the  control  and  direction  of  these 
ships. 

Without  going  into  extended  argument  on  the  point,  I  might 
briefly  sketch  to  you  what  the  Division  of  Operations  has  been  doing 
all  these  months. 

First,  we  have  had  demands  from  the  Army,  and  then  demands 
from  the  European  relief,  but  from  time  to  time  we  were  able  to 
give  certain  support  to  trade.  Happily  we  are  coming  to  a  time  when 
we  can  give  them  much  better  support — cotton  and  coal  and  manufac- 
tured articles  of  this  country  which  have  been  suffering  for  a  year 
past  for  lack  of  vessels  will  gradually  now  get  some  relief. 

We  proceeded  on  the  theory  of  revising  our  fleet.  The  difference 
between  an  economical  ship  and  a  wasteful  ship  is  the  difference 
between  success  and  failure.  Type  of  ship  and  type  of  propulsion  is 
changing  every  day.  As  far  as  we  can,  we  have  been  readjusting 
these  conditions,  intrusting  our  ships  to  operating  companies  at  home 
and  they  are  going  abroad.  The  fleet  is  gradually  piling  up.  There 
have  been  days  when  as  many  as  five  new  ships  have  come  to  hand — 
the  average  has  been  20  a  week.  It  gets  to  be  colossal;  it  gets  to 
be  so  complicated  and  so  complex  and  so  far-reaching  that,  do  the 
best  we  can.  we  make  poor  headway  with  it.  I  am  surprised  that 
there  has  not  been  more  criticism  throughout  the  country  than  there 
has  been.  But  this  is  the  problem — if  we  are  to  profit  by  all  of  the 
sacrifices  we  have  made  in  providing  these  ships  at  a  cost  of  over 


64 

three  billion  dollars  to  build  a  bridge  of  ships,  we  should  study 
out  now  a  very  definite  scheme  of  foreign  trade.  By  foreign-trade 
routes  I  mean  this  very  important  point,  which  I  would  like  to  im- 
press on  you — regularity  of  sailings  in  all  of  the  ports.  This  morn- 
ing reference  was  made  to  the  tramp  steamer.  The  real  instrument 
of  advantage  to  the  industry  and  agriculture  interests  of  this  country 
is  to  be  best  served  by  the  regular  liner.  In  that  respect  we  can 
well  afford  to  take  a  page  out  of  the  book  of  the  late  German  Em- 
pire. To  illustrate — in  times  before  the  war,  as  the  chairman  has 
pointed  out  to  you,  and  right  up  to  to-day,  our  mails  have  not  been 
carried  in  our  own  ships.  Before  the  war  our  manufacturers  would 
receive  an  inquiry  from  such  an  important  but  remote  market  as 
South  Africa,  and  they  would  not  know  beyond  a  few  weeks  in  ad- 
vance what  shipping  opportunity  was  open  to  them.  Contrast  with 
that  the  opportunity  of  the  manufacturer  or  agriculturist  to  know 
that  every  month  of  the  year  what  date  a  ship  would  sail  from  a 
given  point  to  a  given  destination.  Couple  that  up  with  the  great 
advantage  we  could  derive  from  the  unscrambling  of  our  railroad 
situation.  We  have  at  our  command  advantages  far  offsetting  the 
disadvantages  of  lack  of  experience,  the  disadvantage  of  probably  not 
the  ideal  type  of  ships,  leaving  for  us  to  construct  this  important 
element  of  foreign  connection. 

Now,  the  way  it  appeals  to  me,  the  Government  can  function  very 
well,  but  I  know  that  it  is  difficult  for  the  Government  to  establish 
proper  agencies  in  other  sovereign  countries.  That,  it  seems  to  me, 
is  a  matter  for  domestic  enterprise.  I  would  proceed  along  the 
theory  of  future  management  of  ships  from  the  standpoint  of  eco- 
nomic operation  and  the  best  results  for  all  interests  in  this  country 
to  divorce  the  Government  from  the  operation.  That  is  the  way  it 
impresses  me  very  strongly.  Intrust  it  to  private  enterprise ;  impose 
on  the  private  enterprise  all  of  the  restrictions  and  all  reasonable 
guarantees  and  regulations  which  good  sense  and  foresight  will  per- 
mit— maximum  rates,  if  you  will,  a  guarantee  of  sailings,  the  facility 
of  through  bill  of  lading  in  connection  with  your  railroads,  offering 
the  small  shipper  the  same  opportunity  as  the  large  shippers  had  in 
the  past,  because  the  large  shipper  could  provide  himself  with  a  ves- 
sel and  load  it  entirely,  whereas  the  small  shipper  was  limited  to  the 
opportunity  presented  in  the  so-called  berth  business. 

This  question  of  trade  routes  is  really  at  the  bottom  of  the  whole 
problem.  Until  we  have  established  a  trade  route,  or  if  we  should 
make  the  mistake  of  casting  this  fleet  promiscuously  to  the  winds 
under  any  form  of  random  sale  or  charter  hire  and  fail  to  conserve 
to  the  Nation  the  opportunity  you  now  have  of  building  up  regular 
lines,  why  all  of  our  efforts  I  am  afraid  will  go  for  naught,  because 
without  regularity  and  without  some  direction  or  control,  and  with- 
out some  control  of  needless  competition  between  ourselves  and  the 
fierce  competition  that  is  coming  to  us,  we  are  going  to  fail.  The 
man  who  can  make  some  money  now  and  can  not  weather  the  stormy 
days  will  lead  to  the  result  where  the  whole  fabric  will  totter. 

The  railroad  question  is  of  tremendous  importance.  I  do  not  know 
whether  you  gentlemen  have  realized  that  in  the  past  the  railroad 
rates  from  the  standpoint  of  terminal  charges  have  been  often  fixed 
from  the  basis  of  the  most  costly  ports.  For  instance,  the  port  of 


65 

New  York,  it  can  be  truthfully  said,  that  railroad*  terminal  charges 
there  are  as  much  as  four  times  per  car  as  at  other  ports,  the  reason 
being  that  the  railroad  is  not  adjacent  to  the  ship.  That  high  stand- 
ard is  taken  for  fixing  terminal  charges  on  railroad  rates  on  the  ports 
in  the  whole  country,  and  they  are  taxed  needlessly  in  our  export 
business. 

A  proper  survey  of  the  shipping  situation  requires  that  we  decide 
upon  the  best  avenues  of  interior  transportation.  For  many  years 
past  the  Gulf  area,  for  instance,  has  suffered  from  the  influence  of 
the  east  and  west  railroads.  Cargo  has  been  hauled  east  and  west 
that  could  have  gone  to  the  Gulf  ports ;  even  the  great  cotton  regions 
of  the  southern  States  could  have  been  delivered  at  ports  such  as  the 
north  coast  of  South  America,  west  coast  of  South  America,  the  West 
Indies,  on  a  trade  route  that  would  be  more  advantageous  than  the 
route  by  other  ports  which  had  become  more  settled  and  better 
established. 

These  are  two  problems  that  come  very  closely  together,  the  solu- 
tion of  the  railroad  proposition  and  of  the  shipping  proposition.  The 
Shipping  Board,  I  can  assure  you,  has  struggled  very  valiantly  with 
this  problem. 

As  far  as  we  can  see,  the  question  of  manning,  cadets,  the 
question  of  fueling  our  ships,  the  question  of  correct  assign- 
ment of  types  to  trades  has  been  dealt  with  conscientiously  here. 
We  have  been  mindful  of  the  fact  that  we  have  sometimes  had 
to  send  ships  that  were  too  small  and  on  too  long  a  journey, 
but  the  fact  was  that  we  had  such  a  limitation  that  nothing  else 
could  be  done,  and  it  was  a  case  where  we  had  to  do  the  best 
we  could.  Xow  we  are  coming  to  a  new  time  when  we  will  have 
more  and  better  ships,  and  the  question  we  have  got  to  decide  here, 
not  in  the  spirit  of  suspicion  that  the  shipping  man  is  trying  to  take 
some  advantage,  but  from  the  great  principal  standpoint  of  national 
interest,  is  this  one  I  have  laid  before  you,  and  I  can  assure  you 
I  have  been  committed,  and  Mr.  Hurley  has  been  committed,  and  all 
the  members  of  the  Shipping  Board  have  been  committed,  to  its 
solution.  [Applause.] 

Mr.  HURLEY.  There  is  an  invitation  I  would  like  to  have  read. 
It  is  from  Mr.  Brush,  of  the  American  International  Shipbuilding 
Corporation  at  Hog  Island. 

(Mr.  Earnshaw  read  the  following  invitation:) 

I  am  advised  by  the  Hon.  E.  N.  Hurley,  chairman  of  the  United  States  Ship- 
ping Board,  that  he  anticipates  having  a  conference  in  his  office  in  Washing- 
ton on  Thursday  and  Friday,  May  22  and  23  next,  with  representatives  from 
various  ports  of  United  States,  for  the  purpose  of  discussing  the  Shipping 
Board  program  and  the  future  of  the  American  merchant  marine. 

Mr.  Hurley  lias  suggested  that  perhaps  it  would  be  of  interest  to  you  as  a 
member  of  this  meeting  to  visit  the  American  International  Shipbuilding  Cor- 
poration yard  at  Hog  Island.  Pa.,  and  witness  the  launching  of  a  ship  and 
inspect  the  yard. 

In  view  of  the  fact  that  we  have  a  launching  on  Saturday,  May  24,  and  are 
constructing  50  ships  on  50  ways,  have  10  ships  in  the  wet  basin,  and  have 
satisfactory  records  of  the  performance  of  the  18  ships  so  far  delivered,  we 
are  very  glad  indeed  to  extend  to  you  an  invitation  to  come  to  Philadelphia 
Friday  night,  the  23d,  and  be  our  guest  from  Washington. 

In  order  that  we  may  be  sure  to  make  proper  accommodations,  we  would 
appreciate  it  very  much  indeed  if  you  would  kindly  promptly  advise  Mr. 
James  V.  Converse,  acting  secretary  of  the  United  States  Shipping  Board, 

121034—19—5 


66 

i 

Room  1012,  1319  F  Street  NW.,  Washington,  D.  C.,  who  has  kindly  consented  to 
assist  us  in  this  matter  and  advise  us  of  the  number  to  attend.  Mr.  Converse 
will  take  care  of  Pullman  reservations  and  tickets.  Tickets  can  be  obtained 
at  his  office. 

I  beg  to  inclose  herewith  an  itinerary  of  the  trip,  which  is  self-explanatory. 
Trusting  we  will  have  the  pleasure  of  seeing  you  on  Saturday,  I  am, 
Respectfully,  yours, 

M.  C.  BRUSH. 

Itinerary  for  trip  to  Hog  Island,  May  23,  1919. 

12.40  a.  m.  Special  cars  leave  Washington,  train  No. 

8  a.  m.  Breakfast  at  Bellevue-Stratford  Hotel. 

9.30  a.  m.  Arrive  Hog  Island. 

10  a  m.  Launching. 

10.30  to  12.30  p.  m.  Inspection  of  ships  and  yards. 

12.45  to  3  p.  m.  Luncheon  at  Hog  Island  Hotel. 

3  to  6  p.  m.  Arrangements — baseball  game. 

7.30  p.  in-.  Informal  dinner  at  Bellevue-Stratford  Hotel. 

10.40  p.  m.  Train  leaves  for  Washington. 

Mr.  HURLEY.  The  meeting  is  adjourned  until  10.30  a.  m.  to-morrow 
morning. 

MORNING    SESSION. 

The  meeting  was  called  to  order  at  10.30  o'clock  a.  m.,  by  Chairman 
Hurley. 

Mr.  HURLEY.  Did  you  want  to  say  something,  Mr.  Knox  ? 

Mr.  WILLIAM  KNOZ,  of  the  National  Foreign  Trade  Council,  New 
York  City.  I  simply  wanted  to  suggest  to  the  conference  that  the 
chair  make  a  ruling  that  all  speeches  shall  be  limited  to  15  minutes. 

Mr.  HURLEY.  Following  out  our  course  of  yesterday?  Very  well, 
if  that  is  agreeable,  we  will  do  that.  I  will  call  first  on  Mr.  Edw. 
C.  Plummer,  of  the  Atlantic  Carriers'  Association,  of  Bath,  Me. 

Mr.  E.  C.  PLUMMER,  of  the  Atlantic  Carriers'  Association.  Mr. 
Chairman  and  gentlemen,  I  think  I  know  why  that  motion  was 
brought  up,  because,  as  Senator  Ransdell  knows,  my  face  has  been 
a  familiar  one  in  this  city  for  20  years.  My  friends  say  it  has  not 
changed  much  during  that  time,  and  my  views  have  not  changed  at 
all  during  that  time,  and  so,  of  course,  we  had  better  put  a  15-minute 
limit  on  speaking,  and  I  will  keep  inside  of  it. 

I  represent,  and  have  now  for  20  years,  Americans  whose  life  work 
has  been  the  building  and  the  operation  of  American  vessels,  largely 
in  the  coasting  trade,  and  when  this  war  came  on,  our  men,  men 
like  my  friend  Capt.  Crowley,  Crowell,  and  Thurlowe,  and  others 
who  had  been  progressive,  had  the  steel  ships  that  were  needed  and 
were  a  godsend  to  the  Government  in  the  time  of  peace. 

Now,  I  want  to  take  up  one  of  the  suggestions  I  heard  yesterday— 
unfortunately  I  was  not  here  in  the  forenoon — because  whenever  I 
hear  a  suggestion  or  a  criticism  made,  manifestly  in  good  faith,  I 
think  the  man  is  entitled  to  a  real  answer. 

I  think  the  most  important  suggestion  that  was  brought  up  rela- 
tive to  the  subject  of  vessel  operation  by  the  Government  was  made 
by  the  gentleman  who  asked  whether  or  not  there  would  be  danger 
of  a  shipping  trust.  I  think  I  can  give  the  facts  Avhich  will  confirm 
what  Mr.  Rosseter  said  yesterday — and  we  speak  by  the  record.  For 
100  years  the  coasting  people  have  enjoyed  what  has  been  called  a 
monopoly  in  the  coasting  trade.  When  this  war  came  on  they  had 


67 

the  greatest  coasting  fleet  the  world  ever  saw,  and  just  during  that- 
time,  in  spite  of  the  monopoly,  the  constant  competition  and  progres- 
siveness  resulted  in  bringing  freights  in  the  coastwise  trade  to  the 
lowest  point  the  world  had  ever  seen.  Let  me  say  this  to  my  fellow 
farmers,  because  they  will  know  what  I  am  talking  about.  They  will 
remember  that  under  that  progressive  work  the  Lake  carriers  brought 
down  by  progressive  work  the  price  on  wheat  so  jthat  it  could  be  taken 
.from  the  West  down  to  Chicago  and  Buffalo  and  other  shipping 
points  at  1J  cents  a  bushel,  which  at  that  time  was  the  lowest  freight 
rate  on  water  in  the  whole  world.  How  did  they  do  it ,?  They  did  it 
in  a  way  that  the  Government  could  not  do  it.  I  will  refer  to  one 
instance,  and  it  is  only  one  of  many.  When  the  locks  were  enlarged 
and  the  opportunity  was  offered,  those  people  "  junked  "  a  great  fleet 
of  vessels,  none  of  which  were  more  than  12  years  old.  They  junked 
them  and  built  new  and  bigger  ships  that  could  equal  the  business. 
Would  this  Shipping  Board  or  any  other  Government  institution 
dare  to  junk  a  great  fleet  of  vessels? 

Take  it  in  the  coasting  trade,  when  Capt.  Crowley  and  I  were  young 
men,  it  was  costing  from  3  to  3J  cents  to  bring  coal  from  Norfolk  to 
Boston  and  Portland.  Capt.  Crowley  was  one  of  those  who  devel- 
oped the  line,  you  will  remember — four,  five,  and  six  masters — and 
then  with  Capt.  Crowley,  who  built  the  only  seven-mast  vessel  in 
the  world,  they  went  into  the  building  of  steamers  and  they  brought" 
the  transportation  of  coal  down  to  as  low  as  45  cents  a  ton.  It  was 
competition  that  did  it;  so  you  will  understand  that,  by  the  record, 
Mr.  Rosseter  is  correct  when  lie  says  you  don't  have  to  foar  any  ship- 
ping trust,  because  if  internal  competition  will  hold  you  down  like 
that,  that  internal  competition,  to  which  will  be  added  the  foreign 
competition,  is  sure  to  hold  you  down. 

Now,  I  understand  that  yesterday  forenoon  one  of  the  gentlemen 
asked  why  it  was  that  we  did  not  go  into  the  ship  business  before  the 
war  came  on.  Let  me  answer  from  experience  in  my  home  town. 
Many  of  you  shipping  men  will  recall  the  Sewell  flag,  a  flag  which 
has  been  on  the  ocean  for  a  hundred  years.  When  I  returned  from  the 
English  yards,  Mr.  Arthur  Sewell  proceeded  to  turn  over  his  wooden 
ships  to  a  steel  shipbuilding  plant,  and  he  built  the  most  magnificent 
fleet  of  steel  sailing  vessels  the  world  ever  saw;  ships  like  the  Atlas, 
the  Acme,  and  that  magnificent  William  P.  Frye,  which  the  Germans 
sunk,  because  of  its  name  as  well  as  of  its  flag.  That  man  had  capital 
of  his  own,  and  he  could  command  capital.  He  had  built  the  vessels  at 
a  time  when  we  had  a  hope  that  the  Government  was  going  to  stand 
behind  us.  He  built  them  just  on  that  hope — a.  hope  that  was  dis- 
appointed. And  they  ran  those  vessels  as  long  as  they  could  get  a 
dollar  back.  It  was  not  a  question  of  profit;  they  had  the  vessels; 
their  money  was  in  them;  they  had  to  run  them  if  they  could;  and 
they  found  that  under  *the  competition  they  could  not  even  keep 
running,  let  along  get  profits,  and  to-day  the  Sewell  flag  is  a  thing  of 
the  past.  That  is  why  we  haven't  been  in  that  trade. 

Now,  I  won't  discuss  what  Government  ownership  may  mean,  except 
to  this  point :  You  can  not  get  in  Government  operation  that  personal 
initiative  which  is  the  only  thing  which  assures  success.  In  times  of 
emergency  you  can  call  on  men  like  Schwab  and  Franklin  and  others, 
but  they  are  not  hired  men.  Ordinarily  you  must  take  the  average 


68 

men,  and  men  who  make  progress  in  business  are  the  men  who  are 
not  trying  to  get  their  salaries  each  Saturday  night ;  they  are  trying 
to  make  a  record,  to  build  up  something  which  is  more  than  money. 
That  is  the  reason  that  men  like  Capt.  Crpwley  have  worked  and 
gone  ahead  in  overcoming  the  difficulties  which  have  faced  them  and 
built  up  a  great  fleet.  To-day  the  Shipping  Board  proposition  is 
right  in  the  air.  I  think  I  know  what  shipping  men  are  thinking  of, 
and  I  know  that  we  are  facing  a  radical  development  that  to  my  mind 
is  as  great  as  that  development  which  came  when  sail  gave  way  to 
steam.  I  know  what  my  neighbors  are  doing  in  the  Texas  Steamship 
Co.  I  will  mention  one  thing.  They  are  building  Diesel-engine  ves- 
sels. They  are  not  jumping  blindly ;  they  are  building ;  they  are  going 
to  find  out.  That  is  only  one  of  the  things. 

Again,  Mr.  Rosseter  has  been  for  years  with  W.  R.  Grace  &  Co.,  a 
world-famous  body  now,  yet  I  can  remember  when  W.  R.  Grace  was 
just  starting  in  and  building  Avooden  sailing  vessels  within  a  pistol 
shot  of  my  home.  They  developed  the  business  because  they  studied 
the  business.  They  had  the  merchant  intelligence  to  go  with  the  ship- 
ping operation,  and  the  result  was  that  in  spite  of  handicaps  they 
built  up  a  great  business. 

If  we  are  going  to  have  success  with  an  American  merchant  marine 
you  have  got  to  have  the  business  in  charge  of  experts,  men  who  can 
study  and  who  will  study,  and  who  will  take  the  problems  to  bed  with 
them  at  night  and  have  them  with  them  in  the  morning,  if  you  are 
going  to  develop.  You  can  not  run  successfully  a  4,000-ton  ship  on  a 
10,000-ton  route ;  neither  can  you  run  a  10,000-ton  ship  on  a  4,000-ton 
route.  And  you  can't  run  successfully  a  16-knot  ship  on  a  12-knot 
route,  and  the  reverse  is  also  true. 

Therefore.  I  say  that  we  have  got,  if  we  are  going  to  meet  this  world 
competition — and  it  is  going  to  be  the  fiercest  competition  that  we 
have  ever  had,  and  we  have  had  something  fierce  for  the  last  40  years — 
you  must  have  the  very  best  brains  in  the  country  devoted  to  it,  and 
you  can't  get  that  devotion  unless  the  men  have  something  besides 
dollars  to  draw  them  on. 

Now,  gentlemen,  here  is  a  question  that  came  up  yesterday :  "  What 
should  the  Shipping  Board  be  allowed  to  do  in  the  matter  of  these 
vessels  ?  "  And  it  was  suggested  that  they  be  allowed  to  sell  the 
wooden  vessels.  I  feel  that  this  body  can  do  nothing  better  than  to  say 
to  this  Shipping  Board :  "  Gentlemen,  you  sell  any  or  all  of  those  ves- 
sels to  foreigners  or  to  natives  or  to  anybody  who  will  buy  them,  pro- 
vided you  think  that  is  the  best  thing  that  could  be  done."  And,  inci- 
dently,  let  me  say  that  the  implied  knocks  against  tjie  wooden  vessels 
have  a  comeback!  There  are  places  in  this  world  where  wooden  steam- 
ers are  in  demand.  Within  10  miles  of  my  home  town  we  are  building 
three  wooden  steamers  to-day  for  foreign  account.  They  can  be  op- 
erated in  those  foreign  waters ;  they  can  not^e  operated  here.  There- 
fore, the  Shipping  Board  should  be  encouraged  to  sell  any  of  those 
vessels  that  in  their  judgment  and  in  the  judgment  of  their  experts 
should  be  sold,  and  we  should  give  them  our  indorsement  and  give 
them  a  free  hand  and  say : c  Gentlemen,  go  to  it." 

Now,  again,  there  is  a  great  work  for  the  Shipping  Board  to  do. 
The  great  trouble  has  been  with  us  in  the  past  that  we  have  been 
stabbed  in  the  back.  There  has  been  no  better  work  done  in  Congress 


69 

in  years  than  was  done  by  Judge  Alexander,  as  chairman  of  the  Com- 
mittee on  Merchant  Marine,  when  it  investigated  our  shipping  propo- 
sition, and  they  brought  out,  among  other  things,  the  fact  that  certain 
great  European  lines  had  combined,  divided  up  the  trade,  and  when 
any  outsider  undertook  to  get  in  they  had  six  fighting  ships,  as  they 
called  them — Mr.  Barstow  Smull,  of  New  York,  knows  what  that 
means ;  he  got  hit,  and  others  that  tried  to  do  business  got  hit,  too,  by 
them.  They  would  send  one  or  two  or  the  whole  six  of  those  fighting 
ships  down  to  that  port  and  take  the  trade  at  a  figure  that  the  other 
man  couldn't  live  on,  drive  him  out  of  business,  and  then  up  would  go 
the  rates  again  and  the  other  fellows  paid  the  bills.  There  is  a  place 
where  our  board  can  do  great  work.  I  think  I  must  have  used  up  my 
time,  but,  as  Senator  Ransdell  knows,  there  is  nothing  to  prevent,  so 
far  as  I  am  concerned,  my  talking  for  a  week,  but  I  simply  wanted  to 
touch  a  few  of  these  points. 

Mr.  HURLEY.  Thank  you  very  much,  Mr.  Plummer. 

Mr.  HURLEY.  Mr.  C.  F.  Gregory,  of  the  International  Harvester 
Co.,  Chicago,  111. 

Mr.  GREGORY.  Mr.  Hurley,  I  think  I  would  like  to  be  a  spectator 
to-day.  I  wasn't  able  to  be  present  yesterday,  and  I  would  like,  if  I 
might,  be  called  upon  to  speak.  I  have  an  open  mind  on  this  subject 
to  a  very  large  extent  and  I  have  had  so  many  opinions  and  so  many 
arguments  advanced  in  almost  every  direction  that  I  am  quite  frank 
to  confess  that  I  am  a  little  bit  at  sea. 

Mr.  HURLEY.  Mr.  Lincoln  Reed,  vice  president  of  the  Southern 
Railway.  (Not  present.) 

Mr.  HURLEY.  Mr.  Edward  B.  Burling,  of  the  National  Mercantile 
Marine  Association.  Washington,  D.  C. 

Mr.  BURLING.  I  have  been  asked  by  the  National  Mercantile  Marine 
Association  to  come  here  more  than  on  the  invitation  of  the  Shipping 
Board.  I  was  also  asked  by  the  Chamber  of  Commerce  of  the  United 
States  in  care  of  the  committee  to  present  the  views  of  that  com- 
mittee. I  don't  think  I  am  going  to  be  able  to  give  you  the  views  of 
the  merchant  marine  association  or  of  the  chamber  of  commerce 
definitely,  because  neither  of  those  organizations  have  come  to  final 
and  definite  conclusion,  but,  I  think,  I  can  give  you  a  general  drift 
of  the  opinion  of  the  members  of  those  organizations  as  I  have  got 
them. 

I  don't  know  that  you  all  know  what  the  National  Mercantile  Marine 
Association  is.  It  grew  out  of  a  conference  which  Senator  Ransdell 
called  in  Washington  on  January  19.  Men  came  here  from  all  parts 
of  the  country  and  the  interest  was  so  great  that  it  was  resolved  to 
form  a  permanent  association  and  that  association  has  offices  in  the 
Munsey  Building,  in  Washington,  and  Senator  Ransdell  has  kindly 
consented  to  act  as  president  o?  the  association  and  Mr.  William 
Allen  is  secretary.  It  is  an  association  which,  I  believe,  will  perform 
a  very  useful  service. 

Speaking  now  for  the  committee  of  the  chamber  of  commerce  of 
which  Mr.  Myrick  and  myself  and  Mr.  Gregory  are  members,  I  don't 
know  whether  any  other  members  of  that  committee  are  here  or  not. 
That  committee  has  taken  for  granted  that  there  should  be  a  mer- 
chant marine  under  the  American  flag.  They  have  not  gone  into  a 
study  of  that  question.  Some  of  the  men  who  have  come  before  that 


70 

committee  have  raised  a  question  as  to  whether  or  not  it  wouldn't  be 
desirable  from  aa  economic  standpoint  to  continue  possibly  a  ma- 
jority of  the  ships  now  being  built  by  the  Government.  That  com- 
mittee has  considered  as  its  policy  that  this  country  is  to  have  a 
merchant  marine  under  the  American  flag  and  the  problem  is  not 
whether  we  are  to  have  a  merchant  marine,  but  as  to  how  it  can  be  de- 
veloped, as  a  Government  institution  as  perhaps  the  post  office  is 
operated,  or  as  a  private  enterprise  under  private  commissioners  and 
private  management.  Briefly  I  think  I  can  say  to  you  that  all  the 
members  of  the  chamber  of  commerce  are  unanimously  of  the  opinion 
that  a  merchant  marine  can  not  be  successfully  established  except 
under  private  operation  and  they  are  of  the  opinion  that  the  Gov- 
ernment should  as  early  as  practical  go  out  of  the  operating  and 
the  owning  of  the  merchant  ships.  They  are  of  the  opinion  that  all 
the  ships  could  be  sold.  They  do  not  consider  it  feasible  to  sell  a 
portion  of  the  ships.  They  do  not  believe  that  private  capital  would 
be  willing  to  compete  with  Government.  If  the  Government  were 
to  be  operating  some,  they  believe  that  private  capital  would  not  be 
readily  secured  to  undertake  to  operate  part  of  it.  They  are  of  the 
opinion  that  all  the  wooden  ships  should  be  disposed  of  at  the  best 
price  obtainable  to  any  buyer,  foreign  or  domestic,  without  any  re- 
striction as  to  flags.  They  also  understand  that  there  is  a  surplus 
of  the  smaller  type  of  steel  ships.  They  do  not  believe  that  for 
overseas  trade  ships  of  less  than  6,000  tons  dead-weight  can  be  suc- 
cessfully operated.  They  are  in  favor  therefore  of  selling  for  the 
best  price  obtainable  to  foreign  or  domestic  buyers  all  the  surplus  of 
the  smaller  steel  ships.  This  leaves  the  larger  steel  ships  which  are 
capable  of  overseas  service  which  the  committee  takes  to  be  ships  of 
over  6,000  tons  dead-weight. 

What  shall  be  done  Avith  those  ships  which  the  Government  now 
owns  or  has  building  under  contract?  The  committee  are  of  the 
opinion  that  those  ships  should  be  sold — should  be  sold  to  private 
American  buyers.  They  believe  that  the  buyers  should  be  free  from 
any  governmental  restrictions  whether  as  to  routes  or  as  to  rates, 
and  that  the  Government  should  go  out  of  the  business  of  operating 
ships  of  that  class  entirely.  They  believe  that  those  ships  should 
be  sold  as  widely  as  possible,  that  they  should  not  be  concentrated 
in  any  one  port  or  in  a  few  hands  and  for  that  purpose  they  are  dis- 
posed to  i^commend  that  the  Government  invite  the  formation  of 
organization  in  all  the  principal  ports  of  the  United  States,  that 
the  chambers  of  commerce  and  similar  bodies  in  all  the  ports  of  the 
United  States  be  invited  to  form  an  association  which  would  take 
their  allotment  of  these  ships;  that  those  associations  be  responsible 
for  distributing  to  private  shipping  companies  the  ships  allotted 
to  each  section.  The  purpose  of  that  is  to  secure  the  widest  dis- 
tribution possible.  They  believe  that  those  associations  could  be 
formed  as  a  patriotic  public  service  which  would  have  each  com- 
munity undertake  to  take  over  from  the  Government  the  ships 
allotted  to  that  section  and  to  find  competent,  or  to  organize  com- 
petent, shipping  companies  to  take  them  over.  It  is  not  the  thought 
that  those  associations  would  earn  any  profits  or  engage  in  the  opera- 
tion of  ships.  They  would  be  semipublic  organizations,  designed 
simply  for  the  purpose  of  acting  as  intermediary  between  the  Gov- 


71 

eminent  and  the  private  shipping  organizations  of  the  respective, 
sections.  As  to  the  price  of  the  ships  to  be  sold  the  committee  can 
not  see  how  American  buyers  can  be  expected  to  pay  more  for  their 
ships  than  their  foreign  competitors.  They  are  therefore  of  the 
opinion  that  the  ships  should  be  sold  at  the  world  market  value. 

They  are  of  the  opinion  also  that  liberal  terms  as  to  payment 
should  be  given,  that  it  be  on  long-time  terms  at  a  moderate  rate  of 
interest.  The  committee  is  not  prepared  to  say  whether  under  those 
circumstances  they  believe  that  the  private  shipping  companies  can 
operate  ships  successfully  in  competition  with  the  shipping  men  of 
other  countries.  They  consider  that  conditions  are  so  chaotic  at  the 
present  time  that  the  future  condition  of  the  shipping  business  is  so 
unsettled  that  they  are  not  prepared  to  form  a  conclusion  as  to 
whether  or  not  any  governmental  assistance  will  be  required  in  order 
to  enable  the  owners  of  those  ships  bought  from  the  Government,  to 
operate  in  competition  with  the  foreign  shipping  companies.  I 
think  I  have  expressed  the  opinion ;  Mr.  Myrick,  have  you  any  other 
questions?  [No  response.]  I  think  that  expresses  the  opinion  of 
that  committee. 

Now  the  National  Merchant  Marine  Association  has  not  attempted 
to  formulate  any  opinion  as  representing  their  organization  as  yet. 
That  association  has  members  living  in  all  parts  of  the  country.  It 
has  a  council,  a  governing  council  of  some  fifty  odd  members.  All 
the  members  of  that  council  have  been  invited  to  express  their  in- 
dividual opinion.  Individual  opinions  have  been  obtained  from  most 
of  the  members  of  that  council  and  the  secretary  of  the  council,  Mr. 
Allen,  is  going  to  deliver  to  the  Shipping  Board  all  those  individual 
opinions.  There  is  not  entire  unanimity  among  those  members,  but 
in  general  I  think  that  the  drift  of  the  opinions  of  the  members  of 
that  council  are  strongly  in  the  direction  of  a  sale  of  all  the  ships  as 
soon  as  that  may  be  accomplished. 

EXHIBIT  AA. 

COPIES  OF  LETTERS  FROM  MEMBERS  OF  THE  COUNCIL  OF  THE  NATIONAL  MERCHANT 

MARINE  ASSOCIATION. 

[Received  in  response  to  the  request  of  the  chairman  of  the  executive  com- 
mittee for  written  expressions  of  opinion  upon  the  disposition  of  the  merchant 
ships  controlled  by  the  United  States  Shipping  Board.  Filed  with  United 
States  Shipping  Board  in  connection  with  statement  by  Mr.  E.  B.  Burling  at 
the  conference  held  in  Washington,  May  22-23,  1919.] 

A    POLICY    FOR    AN    AMERICAN     MERCHANT    MARINE. 

[By  GEO.  J.  BALDWIN,  President,  Pacific  Mail  Steamship  Co.] 

Naval  value  of  merchant  marine. — An  important  fact,  always  understood  by 
naval  experts,  now  fully  appreciated  by  the  Congress,  but  not  yet  by  the 
country  at  large,  is  that  a  naval  vessel,  in  order  to  constitute  a  sufficient  first 
line  of  defense,  must  be  able  to  attack  in  any  waters  and  can  not  be  so  used 
unless  supported  by  an  adequate  fleet  of  transports  and  supply  vessels  as  its 
second  line  of  defense.  The  United  States,  not  having  such  a  merchant  fleet, 
thereby  reduced  the  major  portion  of  its  Navy  to  an  expensive  ornament  of 
the  ports  along  our  own  coast.  It  is  unprepared  to  cope  with  any  other  first- 
class  power  in  the  world  and  can  not  properly  fulfill  its  purposes  in  time  of  war. 

Our  fleet  of  merchant  vessels  under  the  American  flag  being  insufficient  to 
keep  our  Navy  properly  afloat  as  a  fighting  unit,  we  sent  to  the  assistance  of 


our  allies  only  our  older  coal-burning  war  vessels,  as  coal  could  be  secured  in 
England,  while  all  oil  tankers  obtainable  were  urgently  required  in  order  to 
keep  the  British  Navy  in  operation  and  for  supplying  oil  to  our  destroyers  in 
convoy  service. 

In  transporting  2,056,122  troops  to  France,  we  placed  in  service  every  possibU 
American  vessel  and  finally  succeeded  in  carrying  in  our  own  ships  not  ovet 
'2'2  per  cent  of  the  above  number.  British  ships  carried  51  per  cent,  French  and 
Italian  ships  took  5  per  cent,  while  about  22  per  cent  traveled  by  interned 
German  vessels  seized  in  our  ports.  This  is  a  shocking  confession  of  national 
weakness. 

These  are  the  real  reasons  which  compel  our  Government  to  build  up  and 
permanently  maintain  an  adequate  Naval  Reserve  of  suitable  vessels  with 
trained  officers  and  sailors  to  man  them.  This  can  be  accomplished  at  reasonble 
cost  if  the  Government  is  prepared  to  aid  in  the  upbuilding  of  a  merchant 
marine  by  private  initiative  on  a  commercial  basis  and  in  no  other  manner,  save 
at  an  expense  impossible  to  bear. 

The  need  of  a  merchant  marine  owned  and  operated  in  our  interests  instead 
of  one  owned  and  operated  in  the  interests  of  our  greatest  competitors  is  a 
necessity  not  previously  understood  by  people  living  away  from  our  seacoasts 
but  which  has  now  been  definitely  forced  upon  their  attention  by  the  difficulties 
and  costs  of  sea  transportation  of  the  products  of  their  farms  and  factories. 
The  United  States  has  now  become  one  of  the  great  exporting  and  importing 
nations  of  the  world,  and  present  conditions  point  to  a  most  rapid  and  con- 
tinuous increase  of  our  commerce.  Both  before  we  entered  the  war  and  now 
since  the  armistice,  the  disadvantages  in  not  controlling  our  own  ocean  trans- 
portation have  been  very  definitely  manifested. 

If  our  farmers  are  to  be  permitted  to  sell  their  surplus  products  abroad 
instead  of  glutting  our  home  markets  with  them,  and  if  our  factories  expect 
to  grow  by  supplying  foreign  needs,  we  must  operate  a  complete  ocean  trans- 
portation system  serving  our  own  interests.  The  producer  must  be  prepared 
to  haul  his  goods  to  the  best  market,  as,  if  he  can  not  transport  them  himself, 
he  must  accept  whatever  price  the  buyer  chooses  to  pay  at  the  point  of  pro- 
duction. Dependence  upon  a  competing  seller,  or  a  shrewd  buyer,  to  haul  your 
products  to  the  consumer,  is  a  most  insecure  foundation  upon  which  to  build 
foreign  commerce.  This  is  self-evident. 

Shipping  conference. — On  January  22, ,  1919,  a  conference  was  called  in 
Washington  by  Senator  Joseph  E.  Ransdell  and  attended  by  many  of  the  im- 
portant ship  owners  and  builders  of  the  United  States.  The  three  principal 
speakers  were  Senator  Duncan  U.  Fletcher,  chairman  of  the  Senate  Committee 
on  Commerce;  Senator  Ransdell,  vice  chairman  of  the  same  committee;  and 
Hon.  Joshua  W.  Alexander,  chairman  of  the  Committee  on  Merchant  Marine 
and  Fisheries  of  the  House.  These  three  gentlemen  are  among  the  leaders  of 
enlightened  thought  on  the  subject  of  a  merchant  marine,  which  all  of  them 
emphatically  stated  must  be  made  thoroughly  adequate. 

They  believed  the  ships  composing  it  would  be  more  efficiently  operated  by 
private  corporations  than  by  the  United  States  Government  and  that  whatever 
aid  and  encouragement  might  be  necessary  from  the  Government  to  bring  this 
about  should  be  furnished,  and  that  if  the  business  men  assembled  would  devise 
and  propose  a  sound  and  rational  policy  which  could  be  enacted  into  law,  such 
policy  \vould  meet  with  their  support,  "if  no  satisfactory  means  could  be  found 
for  maintaining  a  merchant  marine  under  private  initiative,  then  they  believed 
the  Government  should  own  and  operate  it. 

Many  illuminating  suggestions  were  informally  made  during  this  conference, 
emphasizing  the  following  ide'as : 

(1)  Public  opinion  demands  an  adequate  Navy  for  proper  defense.     This  re- 
quires the  ownership  and  operation  of  a  merchant  marine  sufficient  in  tonnage 
to  keep  the  Navy  at  sea  in  war  and  to  carry  our  people  and  merchandise  in 
peace. 

(2)  It  should  consist  of  American  built  ships  manned  by  American  officers 
and  crew,  operated  by  American  owners,  classed  and  insured  by  American  com- 
panies, and  fly  the  American  flag. 

(3)  It  must  have  the  advantage  of  private  initiative  and  energy  in  its  opera- 
tion instead  of  a  less  effective  and  more  costly  operation  by  Government,  but 
must  have  some  form  of  Government  assistance. 

(4)  Freight  and  passenger  rates  must  be  fixed  by  the  demands  of  trade  and 
world  competition,  not  artificially  restrained  by  laws  nor  commission  rulings. 


73 

(5)  The  need  for  immediate  determination  of  a  definite  policy  is  urgent  juwl 
all  action  waits  upon  it.    After  its  enactment  into  law,  our  maritime  code  must 
be  amended  to  fit  the  policy  adopted. 

(6)  The  fleet  now  under  construction  was  designed  to  meet  war  conditions. 
This  entire  shipbuilding  program  should  be  revised  as  completely  and  rapidly 
as  possible  and  adjusted  to  the  conditions  of  commercial  use  and  competition. 

This  fundamental  platform  can  well  be  adopted,  but  to  carry  it  forward  to 
success  we  must  follow  a  policy  as  broad  and  as  bold  as  was  our  shipbuilding- 
plan,  complete  and  definite,  so  that  universal  confidence  in  its  accomplishment 
will  be  aroused.  Once  this  be  done  by  placing  behind  a  sound  plan  the  full 
credit  and  power  of  the  Government,  the  difficulties  can  and  will  be  overcome, 
and  we  shall  have  our  merchant  marine.  Let  our  plans  be  so  fair  that  no  coun- 
try can  object  and  all  can  do  the  same  thing,  if  they  have  the  courage,  the 
wisdom  and  the  power. 

Types  of  vessels  needed. — Before  discussing  a  policy  based  on  the  above  plat- 
form, let  us  consider  what  kind  of  vessels  we  need  and  what  we  have. 

For  this  purpose,  American  shipping  can  be  divided  into  four  classes : 

Class  A. — Express  passenger  and  mail  liners :  Foreign  trade  of  any  magni- 
tude depends  primarily  upon  and  is  built  up  by  means  of  the  establishment  and 
maintenance  of  regular  sailings  at  fixed  dates  of  fast,  first-class  steamship 
with  the  best  passenger  accommodations,  each  boat  de  igned  for  its  particular 
service,  speedy  enough  for  carrying  passengers  and  mail  as  rapidly  as  may  be 
needed.  Such  vessels  are  adapted  for  carrying  a  limited  amount  of  express 
freight. 

Our  foreign  trade  can  never  reach  a  satisfactory  volume  and  character  and 
be  permanently  maintained  until  we  have  organized  and  put  into  operation 
lines  of  boats  of  this  and  of  class  B,  running  from  American  ports  on  the  Atlan- 
tic, Gulf  and  Pacific  coasts  to  the  principal  trade  centers  of  the  world,  such 
as  the  Orient,  India,  Australia,  the  east  and  west  coasts  of  South  America,  the 
Caribbean,  the  Mediterranean,  the  Baltic,  and  the  principal  European  countries, 
and  even  to  both  coasts  of  Africa. 

Class  B. — Cargo  liners:  The  boats  next  in  importance  are  the  cargo  liners 
from  10,000  to  15,000  tons  dead- weight  capacity  with  a  speed  of  from  12  to  15 
knots,  in  some  cases  fitted  for  limited  passenger  service  and  making  regular 
runs  between  such  American  and  foreign  ports  as  may  furnish  a  sufficient 
quantity  of  business  to  need  them  and  where  the  port  facilities  are  adequate  for 
this  class  of  vessel.  Unlike  class  A,  the  routes  of  these  vessels  can  be  changed 
to  meet  the  various  requirements  of  seasonal  trades  and  shifting  business  con- 
ditions, but  should  follow  the  main  general  routes  of  trade. 

This  class  is  intermediate  in  character  of  service  between  the  express  liner 
and  the  tramp. 

Class  C — Specialized  boats :  Certain  trades  require  specialized  boats,  such  as 
oil  tankers,  ore  and  coal  carriers,  refrigerated  boats,  fruit  vessels,  etc.,  each  of 
them  designed  for  the  particular  business  intended  and  often  owned  by  the 
corporation  conducting  it. 

Class  D — Cargo  tramps :  About  two-thirds  of  the  world's  tonnage  is  of  this 
class,  in  which  Great  Britain  sends  abroad  the  coal  exports  which  enable  her  to 
maintain  the  great  fleet  of  ocean  tramps  in  which  she  brings  back  the  bulk  of 
her  raw  materials. 

They  are  usually  boats  averaging  perhaps  5,000  tons,  from  eight  to  ten  knots 
speed,  and  with  less  draft  than  class  B,  fitted  for  the  general  bulk-carrying 
trade  of  the  world,  built  at  the  lowest  costs,  operating  in  all  ports  and  particu- 
larly where  port  facilities  are  not  adequate  nor  cargo  sufficient  for  the  larger 
vessels.  These  boats  shift  from  one  trade  to  another  and  fix  the  freight  rates 
for  the  world  carrying  trade,  necessarily  extremely  competitive  in  its  nature. 
Their  operation  under  the  American  flag,  while  advisable  as  an  auxiliary  for 
our  naval  defense  and  also  for  the  maintenance  of  our  foreign  trade,  is  not  as 
essential  as  the  operation  of  the  first  three  classes,  but  they  must  be  used  in 
sufficient  quantity  to  export  American  coal,  cotton,  phosphates,  lumber,  and 
other  raw  materials  to  those  ports  supplying  enough  return  freights  of  such 
bulk  foreign  products  as  may  be  needed.  For  the  present  we  can  hardly  help 
leaving  the  bulk  of  the  tramp  business  to  England,  Scandinavia,  Japan,  etc., 
but  looking  to  the  future  we  should  certainly  continue  construction  of  sufficient 
numbers  of  this  type  of  boat. 

While  we  must  not  fail  to  build  up  a  permanent  fleet  of  cargo  tramps,  yet  we 
must  devote  our  main  efforts  for  the  immediate  present  to  the  maintenance  of 


74 

the  first  three  most  necessary  classes  of  boats,  in  doing  which  we  should  utilize 
our  existing  shipping  and  shipbuilding  organizations,  expanding  the  former  to 
whatever  extent  may  be  needed.  All  boats  of  these  three  classes  should  be 
buiit  in  the  United  States,  operated,  manned,  and  owned  by  American  citizens, 
rated  and  insured  by  American  companies,  and  fly  the  American  flag,  and  as 
they  constitute  our  second  line  of  naval  defense,  wre  can  not  afford  to  have  them 
owned  or  operated  by  foreigners,  even  though  this  should  be  attempted  through 
the  medium  of  American  corporations.  This  should  now  be  possible,  if  the 
United  States  Government,  through  the  President,  the  Congress,  and  the  Ship- 
ping Board,  will  express  its  determination  to  accomplish  it. 

Possible  forms  of  Government  aid. — It  is  axiomatic  that  the  ideal  trade 
should  be  an  absolutely  free  trade.  Every  burden  or  restriction,  every  tariff, 
license,  tax  or  similar  cost,  however  necessary  some  of  them  may  be,  tends  to 
act  as  a  barrier  in  the  way  of  trade ;  hence,  we  must  carefully  weigh  the  effect 
of  each  one  before  applying  it. 

Our  intent  should  be  to  so  lighten  all  burdens  upon  our  merchant  shipping 
as  to  enable  it  finally  to  compete  in  the  world's  carrying  trade  without  the 
Government  aid  now  required  during  the  upbuilding  period. 

There  are  many  ways  in  which  entirely  adequate  assistance  can  be  safely 
and  properly  extended  by  our  Government  to  foster  private  initiative  in  build- 
ing and  maintaining  our  merchant  fleets,  and  as  many  of  the  following  methods 
may  be  adopted  as  are  needed  to  accomplish  our  purpose. 

1.  In  order  to  attract  American  seamen  so  that  we  may  build  up  the  Naval 
Reserve  needed  as  the  very  foundation  for  both  our  fighting  and  our  trading 
navies,  we  must  provide  ample  and  decent  accommodations  for  the  men  and 
pay  wages  on  the  American  scale  equal  to  those  paid  in  inland  trades,  which 
are  necessarily  higher  than  are  earned  by  the  sailors  of  any  of  our  competitors. 

The  three  needed  classes  of  steamships  should  all  be  adapted  for  Naval  Re- 
serve use,  and  as  this  is  distinctly  a  Navy  cost,  it  should  be  so  recognized.  All 
of  the  officers  and  men  should  be  enlisted  in  a  United  States  Naval  Reserve, 
ready  and  qualified  at  any  time  to  report  for  active  naval  service.  If  this  be 
done  and  the  steamships  held  subject  to  requisition  in  case  of  war,  the  United 
States  Government  should  pay  to  the  operating  companies,  to  be  distributed 
by  them  to  the  officers  and  men,  the  difference  between  the  American  and  for- 
eign wages.  By  no  other  means  can  an  ample  and  efficient  naval  reserve  of 
officers,  men  and  ghips  be  continuously  maintained  as  economically.  The  cost 
would  be  fully  warranted  by  the  results. 

2.  It  is  essential  that  our  foreign  mails  to  those  ports  with  which  we  trade 
should  be  carried  in  American  vessels,  subject  neither  to  alien  control  nor  in- 
spection for  the  benefit  of  our  foreign  competitors.     This  is  not  a  question  of 
carriage  at  a  low  cost  per  ton,  but  a  measure  for  the  protection  of  American 
trade.    With  increasing  parcel-post  facilities  and  growing  trade,  the  volume  of 
mail  will  rapidly  increase. 

For  these  reasons,  such  liberal  compensation  can  be  paid  as  will  materially 
assist  in  bearing  the  excess  operating  costs  of  the  passenger  liners,  and  in  order 
to  induce  private  ownership  in  such  boats,  mail  contracts  could  be  made  for 
20-year  periods,  so  the  owner  could  confidently  look  forward  to  such  stable 
business  and  definite  income  to  enable  him  to  amortize  the  cost  of  the  vessel. 
There  is  no  reason  why  these  costs  should  be  excessive  for  the  service  rendered, 
and  such  contracts  might  be  made  whether  the  vessels  were  owrned  by  the 
Unite!  States  Government  and  privately  operated,  or  entirely  privately  owned. 

3.  Vessels  of  all  three  classes  could  be  temporarily  owned  by  the  United 
States   Government   until   paid   for,   as   hereinafter   suggested.     In    this   case, 
there  would  seem  to  be  no  reason  why  the  United  States  Government  could 
not  carry  its  own  insurance  at  cost  and  thus  partly  felieve  the  operating  com- 
pany of  this  burden. 

The  interest  cost  would  be  held  at  the  lowest  possible  rate  by  thus  extend- 
ing the  Government  credit  during  the  period  in  which  the  vessel's  cost  is 
amortized ;  this  might  perhaps  not  exceed  3  or  3£  per  cent  instead  of  a  cost 
of  6  per  cent  or  more,  which  the  private  owner  would  necessarily  require  to 
compensate  for  the  investment  risk,  but  which  would  not  be  required  by  the 
Government. 

The  amortization  period  for  these  vessels  could  well  be  fixed  at  2o  years,  o 
4  per  cent  per  annum. 

4  Vessels  owned  by  the  Nation  pay  no  State  nor  Federal  tax,  nor  need  ves- 
sels used  in  the  national  service,  even  though  owned  and  operated  by  pri- 
vate corporations,  and  our  merchant  marine  could  well  be  freed  from  this 


75 

burden.  This  aid  has  been  granted  by  Brazil  to  her  merchant  fleet,  and  the 
principle  recognized  by  at  least  two  of  the  States  of  our  Union. 

•I.  On  account  of  its  smaller  bulk,  its  quick  handling  and  easy  stowage,  thus 
permitting  greater  freight  carrying  capacity  and  a  much  enlarged  radius  of 
action,  oil  fuel  is  worth  three  or  four  times  as  much  per  thermal  unit  as  coal 
where  space  and  freight  carrying  capacity  are  of  so  much  value  as  in  steam- 
ships. All  American  vessels  should  be  freed  as  far  as  possible  from  the  use 
of  coal  fuel  and  fitted  to  burn  oil. 

Our  American  consumption  of  oil  is  increasing  rapidly  and  at  present  ex- 
ceeding our  productive  capacity ;  hence  the  Government  should  conserve  its  oil 
supply  for  its  own  vessels  and  avail  itself  of  any  opportunities  for  such  friendly 
alliances  as  may  be  possible  with  neighboring  countries  producing  oil.  The 
Government  could  well  afford  to  fix  a  low  price  for  oil  fuel  supplied  to  Ameri- 
can vessels  from  any  of  its  oil  lands,  which  should  be  preserved  for  this  sole 
purpose. 

Oil  bunkers  must  be  established  at  such  world  ports  as  may  prove  beneficial 
to  American  shipping. 

6.  The  freight  paid  by  the  ultimate  consumer  includes  both  the  ocean  and  the 
railroad  rates.     The  railroad  should  be  free  to  name  through  export  and  im- 
port rates  on  through  bills  of  lading  from  and  to  the  interior  of  the  United 
States  via  any  port  to  or  from  any  foreign  port,  such  rail  division  being  less 
than  the  regular  rail  rate  for  inland  traffic  alone.    This  provision  should  apply 
only  where  such  through  bill  of  lading  is  made  in  connection  with  an  American 
vessel.    This  is  one  of  the  plans  adopted  by  Germany,  to  which  she  very  largely 
owes  the  growth  of  her  merchant  marine. 

7.  We  should  not  place  upon  our  merchant  marine  of  the  future  any  portion 
of  the  burden  of  war  costs ;  otherwise  we  shall  immediately  handicap  ourselves 
to  such   an  extent  that  progress  will  be  impossible,  and  the  entire  program 
will  prove  unsound. 

The  United  States  Shipping  Board  should  carefully  value  all  of  the  boats 
which  it  keeps,  sells  to  Americans,  or  builds  prior  to  a  return  to  normal  costs, 
and  should  write  down  the  value  of  all  of  these  boats  to  such  normal  cost,  charg- 
ing off  the  entire  excess  as  a  war  expense  and  forgetting  it.  No  more  foolish 
proceeding  can  be  conceived  than  the  creation  of  a  new  merchant  marine  in  com- 
petition with  other  nations  who  for  the  past  fifty,  years  have  beaten  us  in  all 
sea  traffic  and  then  handicapping  this  new  merchant  navy  with  the  dead  and 
gone  costs  of  a  completed  war. 

None  of  the  above  suggestions  have  anything  in  common  with  the  old-fash- 
ioned ship  subsidy  idea.  As  will  be  noticed,  they  meet  the  needs  of  our  Navy, 
encourage  our  foreign  trade,  point  toward  removing  all  unnecessary  burdens 
and  restrictions  and  permitting  the  freest  possible  operation  of  individual  initia- 
tive in  commerce. 

The  abnormal  cost  of  building  tonnage  during  the  war  can  not  be  borne  by 
individuals  or  corporations  engaged  in  commercial  trade;  hence  relieving  the 
industries  from  this  excess  cost  is  not  a  subsidy  but  a  definite  war  expense. 
The  whole  idea  of  these  suggestions  is  distinctly  different  from  the  cash  subsidy, 
method. 

Discrimination  in  port  clues  and  discriminatory  tariffs  on  merchandise  have 
both  been  considered,  but  these  methods  seem  unsound,  dangerous,  and  liable 
to  international  misunderstanding,  diplomatic  difficulties,  and  possible  misuse 
at  home. 

Present  Government-on-ncd  merchant  fleet. — In  summing  up  the  situation,  we 
must  consider  the  present  fleet  owned  and  to  be  constructed  by  the  United  States 
Shipping  Hoard.  This  fleet  contains  very  few  vessels  of  class  A,  and  as  im- 
mediate consideration  must  be  given  to  the  establishment  of  our  transocean 
passenger  lines,  ships  should  be  built  at  once  specially  adapted  for  use  on  each 
one  of  these  lines.  If  we  are  determined  to  maintain  an  American  merchant 
marine,  we  shall  need  them,  no  matter  what  our  policy  may  be,  and  the  sooner 
they  are  built,  the  better. 

We  have  quite  a  number  of  class  B  boats  under  construction  and  contract, 
possibly  enough,  although  we  should  give  careful  consideration  to  the  question 
as  to  whether  or  not  we  need  more. 

Of  the  class  C  boats,  we  know  that  in  some  lines  our  fleet  is  entirely  inade- 
quate. Orders  should  promptly  be  given  for  this  construction,  and  owners  en- 
couraged to  build  for  their  own  use. 

Of  the  class  D  boats,  Emergency  Fleet  Corporation  is  constructing  quite  a 
large  number,  and  after  carefully  selecting  all  of  the  individual  boats  or  classes 


76 

of  boats  which  fitted  into  the  above  policy,  it  should  sell 'the  least  desirable 
of  them  at  the  best  obtainable  prices  anywhere  in  the  world's  markets,  even  trans- 
ferring to  foreign  flags  if  so  desired. 

Shipbuilding  industry. — If  we  adopt  such  a  protective  policy  toward  operating 
as  is  here  outlined,  we  shall  continually  build  enough  new  ships  to  maintain  a 
great  shipbuilding  industry,  which  would  need  no  further  assistance  than  the 
requirement  that  ships  of  American  registry  must  be  built  in  American  yards. 
With  the  volume  of  shipbuilding  thus  provided  for,  the  shipbuilders  should  be 
able  to  closely  approximate  the  low  construction  costs  of  any  competitor  and 
ultimately  meet  them  squarely  in  the  open  world  markets. 

No  Government  operation  of  shipyards  in  expensive  competition  with  yards 
of  private  owners  should  be  permitted,  the  Navy  should  throw  all  possible  con- 
struction to  private  yards  so  that  by  increasing  their  volume  of  output,  these 
yards  might  still  further  decrease  their  costs  and  increase  their  value  to  the 
country.  The  policy  of  costly  building  in  Government  Navy  yards  is  unwise 
and  has  so  nearly  wrecked  the  private  shipbuilding  industry  in  the  past  that 
our  existing  organizations  were  totally  unable  to  meet  our  war  needs. 

Suggested  form  of  Government  aid. — Let  the  Shipping  Board,  in  conference 
with  shipbuilders,  ship  operators  and  merchants,  decide  upon  the  main  shipping 
routes  upon  which  we  must  maintain  service,  agree  upon  the  types  of  vessels 
required  for  them  and  select  such  existing  experienced  shipping  organizations 
as  can  best  operate  each  line. 

While  some  of  these  lines  are  now  In  existence,  many  more  must  be  created, 
and  all  must  be  strengthened. 

The  most  advisable  forms  in  which  -Government  aid  may  be  extended 
would  be — 

First.  Creation  of  the  Naval  Reserve. 

Second.  Adequate  mail  payments. 

Third.  Loan  of  Government  credit. 

Fourth.  Freedom  from  taxation. 

Fifth.  Conservation  of  oil  fields  and  creation  of  oil  bunkers. 

Sixth.  Permissible  shrinkage  of  rail  rates  on  through  bills  of  lading  by 
American  boats  only. 

Seventh.  Valuing  vessels  at  normal  instead  of  war  costs. 

The  extent  to  which  these  methods  must  be  applied  should  be  determined  by 
the  importance  of  and  need  for  each  line.  Some  routes  might  require  all  of 
them  and  some  only  three  or  four. 

The  loan  of  Government  credit  could  be  made  by  permitting  a  private  owner 
either  to  purchase  any  steamship  now  owned  by  the  Government  or  any  special 
boats  needed  and  to  be  built,  the  purchaser  paying  25  per  cent  of  the  vessel's 
normal  value  (not  the  war  cost),  title  remaining  in  the  Government  until  the 
purchaser  at  his  continuing  option  liquidates  the  balance  by  cash  payment,  or  it 
be  paid  by  annual  amortization  when  and  if  the  same  be  earned. 

The  first  charge  against  boats  so  owrned  but  operated  entirely  by  private  initia- 
tive should  be  the  actual  operating  costs,  excluding  interest,  amortization,  and 
insurance,  but  including  the  agency  and  operating  expenses  of  the  shipping  cor- 
poration, allowing  a  sufficient  profit  to  keep  the  organization  actively  functioning 
and  encourage  its  enlargement.  Provide  that  interest  and  amortization  be  only 
payable  if  earned,  which  concession  the  Government  can  well  afford,  but  if  such 
interest  and  amortization  be  annually  earned  and  paid,  any  profit  remaining 
should  then  be  divided  equally  between  the  operating  corporation  and  the  Govern- 
ment, the  latter  applying  its  entire  share  to  an  additional  amortization  of  costs, 
the  operating  company  becoming  the  owner  of  the  vessel  if  and  when  entirely 
amortized  and  the  Government  repaid  its  entire  investment. 

This  form  of  extending  credit  by  the  Government  should  ultimately  be  self- 
liquidating.  A  definite  precedent  has  been  established  in  the  construction  of 
Government  irrigating  projects  in  the  West. 

Requirements  for  foreign  trade. — The  vital  importance  of  maintaining  our 
shipbuilding  plants  upon  a  profitable  basis  and  the  expansion  of  our  ship-operat- 
ing organizations  must  be  fully  recognized  by  the  Nation,  which  at  the  same  time 
must  realize  that  it  is  only  one  of  the  elements  of  creating  and  holding  our 
foreign  trade,  which  we  must  at  the  same  time  consider. 

We  must  have  a  free  operation  of  our  railway  systems  upon  a  sounder  basis 
than  has  been  possible  at  any  past  time,  permitting  our  imports  and  exports  to 
seek  the  most  economic  routes  via  our  most  convenient  ports. 

Our  foreign  mails  must  travel  by  the  most  expeditious  routes  and  by  the  quick- 
est means  from  seller  to  customer,  radiating  from  United  States  ports  to  all 


77 

world  trading  centers.  The  airplane  must  be  used  to  its  utmost  extent  in  this 
service  both  for  inland  and  foreign  traffic. 

A  complete  cable  system  under  Government  protection  but  under  private  opera- 
tion must  carry  our  quick  messages  by  wire  over  alternative  routes  radiating 
from  our  coasts  to  all  foreign  countries.  Every  steamship  route  must  be  paral- 
leled by  its  equally  important  cable  or  wireless  service. 

Our  bankers  are  now  extending  their  facilities  in  foreign  lands,  and  must  be 
encouraged  to  enlarge  this  service  by  every  possible  means  until  dollar  exchange 
is  as  readily  obtainable  as  the  pound  sterling  in  the  world's  trading  centers. 

Our  merchandising  companies  must  extend  the  scope  of  their  operations  until 
the  American  salesman,  speaking  the  language  of  the  country  he  visits,  will  be  a 
familiar  and  friendly  visitor  to  every  country. 

Our  Consular  Service  must  be  made  a  stronger  and  more  efficient  arm  of  our 
Government  to  serve  in  this  trade  expansion.  The  American  merchant  abroad 
must  have  his  Government  behind  him  wherever  he  carries  American  trade. 

Our  ship  operators  must  establish  in  every  world  port  an  effective  system  of 
agents  to  secure  and  forward  all  obtainable  freight  in  American  vessels. 

We  must  no  longer  rely  upon  foreigners  for  the  classification  of  our  vessels  and 
for  insurance  upon  them  and  their  cargoes,  and  until  American  corporations  can 
be  increased  sufficiently  in  number  and  size  to  carry  all  of  our  insurance,  the 
Government  should  continue  its  War  Hisk  Bureau,  reorganized  to  carry  any  bal- 
ance uninsurable  in  American  companies. 

All  of  these  things  are  possible,  all  are  obtainable,  and  if  we  have  the  unani- 
mous will  to  obtain  them  we  have  the  power  and  the  skill.  Let  us  come  to  a  deci- 
,sion  and  act  upon  it. 

[From   J.    B.   Carroll,   Washington   manager,    Atlantic   Coast    Shipbuilders'    Association.] 

I  am  opposed  to  Government  ownership  and  operation  of  our  merchant  fleet. 
The  ships  now  owned  and  those  building  by  the  Shipping  Board  should  be  sold 
to  private  investors  at  a  fair  value  and  on  reasonable  terms  without  un- 
necessary governmental  restrictions,  with  proper  safeguards,  however,  to  insure 
against  their  disposition  to  foreigners. 

The  American  people  are  in  a  better  frame  of  mind  now  to  digest  the 
necessary  write-off  as  a  war  expense  than  they  will  be  several  years  hence. 

Our  ships  should  be  operated  for  America  and  manned  by  American  crews 
recruited  and  trained  by  the  Navy  Department,  and  thus  create  a  naval  re- 
serve which  should  be  of  inestimable  value  in  a  national  emegency.  Such 
crews  would  provide  an  element  of  safety  and  lessen  cost  of  operation  through 
their  greater  efficiency. 

Any  differential  in  wages  over  that  of  foreign  competitors  should  be  met  by 
direct  or  indirect  Government  subsidy — as  for  instance,  increasing  the  present 
rate  of  $1  a  month  pay  for  reserves  on  the  inactive  list. 

Inducements  by  way  of  subsidy  or  otherwise  should  also  be  offered  by  the 
Government  for  the  establishment  of  new  mail  and  commercial  routes  and  in 
like  manner  encourage  the  upbuilding  of  foreign  trade  routes  which  are  other- 
wise unprofitable. 

Incidentally  encouragment  should  be  given  to  the  establishement  of  coaling 
stations  and  facilities  at  new  ports  of  American  entry,  and  where  those  facili- 
ties are  now  dominated  by  foreign  interests. 

[From  Stevenson  Taylor,  president  American  Bureau  of  Shipping,  New  York  City.] 

I  am  opposed  to  Government  ownership  and  operation  of  any  special  business 
in  times  of  peace.  The  result  of  Government  ownership  and  operation,  both 
here  and  abroad,  fully  warrants  such  opposition. 

I  am  also  opposed  to  continuing  the  ownership  of  ships,  and  leasing  same  to 
private  companies  on  any  basis  because  such  operation  will  only  result  in  private 
operators  getting  as  much  out  of  the  business  as  possible  without  responsibility 
for  upkeep  of  the  ships  and  probably  without  regard  to  profit  which  the  owner- 
ship should  receive. 

I  am  opposed  also  to  the  scheme  of  turning  over  to  one  large  private  corpora- 
tion the  operation  of  the  now  Government-owned  ships,  the  Government  guaran- 
teeing a  return  on  the  stock  thus  to  be  issued.  In  other  words,  I  am  opposed  to 
this  scheme  because  it  still  means  Government  ownership  and  operation. 

In  my  opinion  there  is  only  one  sensible  way  of  handling  the  subject.  The  Gov- 
ernment under  stress  of  a  great  emergency  properly  fostered  the  construction  of 


78 

shipyards  and  the  building  of  ships  for  the  definite  purpose  of  winning  the  war 
now,  I  trust,  shortly  to  be  ended  forever. 

The  enormous  expenditure  for  this  purpose  was  justified  exactly  for  the 
same  reason  that  other  enormous  expenditures  were  warranted,  such  as  the 
building  up  of  a  large  Army,  a  large  Navy,  and  the  manufacturing  of  all  of  the 
materials  required  by  the  Army  and  Navy. 

Now  that  the  war  (as  we  trust)  is  over,  it  is  the  time  to  salvage  what  we  can 
from  all  of  the  materials  now  on  hand  and  that  are  no  longer  required  for  the 
past  war ;  and  just  as  a  business  corporation  would  do  under  the  circumstances, 
it  is  the  time  to  realize  what  we  can  from  the  salvaging,  charging  the  loss  to 
the  cost  of  the  emergency  which  caused  the  loss. 

Therefore,  believing  as  I  do  that  private  ownership  will  in  the  years  to  come 
be  better  for  an  American  merchant  marine  than  Government  ownership,  I  sug- 
gest the  sale  of  the  ships  owned  by  the  Government  on  some  such  plan  as  pro- 
posed by  Mr.  Hurley,  chairman  of  the  United  States  Shipping  Board,  in  his 
recently  spoken  and  published  "  Plan  for  the  operation  of  the  new  American 
merchant  marine,"  a  plan  which  in  general  appeals  to  me  as  an  American 
citizen  and  which  surely  provides  a  means  for  discussion  out  of  which  will  come 
an  agreement  which  will  result  in  the  establishment  of  a  great  merchant  marine, 
so  much  needed  by  all  classes  of  industry  in  the  United  States. 

[From  H.  L.  Aldrich,  president  Aldrich  Publishing  Co.,  New  York  City.] 

Theoretically,  the  fifth  proposition  for  the  handling  of  our  merchant  marine 
is  the  best  one  in  my  judgment,  but  there  are  not  shipping  companies  in  -die 
United  States  to  take  up  anything  like  the  amount  of  tonnage  there  is  to  be 
disposed  of,  and  if  the  ships  are  disposed  of  along  the  lines  suggested  in  the 
fifth  proposition,  I  think  we  will  find  that  foreign  interests  will  get  greater 
percentage  of  the  tonnage. 

Therefore,  I  am  more  in  favor  of  the  fourth  proposition.  This  proposition 
should  be  safeguarded  by  the  requirement  that  the  directors  and  officials  of 
the  company  taking  over  the  ships  be  American  citizens  and  that  all  of  the 
ships  fly  the  American  flag. 

With  the  Government  guaranty  suggested,  I  think  it  would  be  easy  to  sell 
the  stock. 

For  25  years  I  have  been  giving  very  careful  attention  to  the  subject  of  op- 
erating vessels  under  the  American  flag,  and  I  believe  I  have  outlined  in  the 
attached  carbon  copy  of  a  letter  which  I  sent  to  Senator  Ransdell  last  week 
by  all  odds  the  most  practical  and  scientific  method  ever  proposed  for  building 
up  our  merchant  marine. 

Meantime,  I  want  to  lay  before  you  a  plan  for  operating  the  American 
merchant  marine  that  has  been  thoroughly  thrashed  out,  and  that  lias  the  full 
indorsement  of  many  Members  of  Congress,  of  labor  union  leaders,  and  is 
backed  by  such  strong  men  as  Capt.  Donald  of  the  Shipping  Board,  .Capt.  C.  A. 
McAllister  of  the  Coast  Guard,  etc. 

The  important  section  of  the  bill  that  was  drawn  up  several  years  ago  is 
the  following: 

"  SECTION  12.  That  the  master,  watch  officers,  and  seamen  employed  on  such 
vessels,  being  citizens  of  the  United  States,  may.  with  the  consent  of  the  Presi- 
dent and  under  such  terms  as  he  may  impose,  enlist  and  be  enrolled  as  a  spe- 
cial naval  reserve,  and  while  so  enrolled  and  during  such  employment,  said 
master,  watch  officers,  and  seamen  may  receive  such  pay  and  relative  rank  as 
the  President  may  prescribe." 

You  can  readily  see  that  under  this  section  wages  of  men  on  the  American 
ships  would  be  automatically  made  to  correspond  to  wages  paid  on  competing 
ships  under  foreign  flags  and  yet  through  the  machinery  of  the  United  States 
Treasury  would  receive  the  prevailing  rate  of  wages  paid  on  American  vessels. 
This  system  would  work  automatically  whether  there  was  a  slight  difference 
in  wages,  as  between  an  American  and  a  Japanese  or  other  Asiatic  ship. 

The  special  naval  reserve  feature  of  this  bill  is  immensely  important.  When 
the  Spanish  War  broke  out,  the  Navy  was  desperately  off  to  find  men  to  man 
some  of  the  ships  put  into  the  service.  The  same  has  been  true  in  the  recent 
great  world's  war. 

Under  this  proposed  bill  there  would  be  constantly  training  for  the  United 
States  Navy  a  very  large  number  of  men,  and  the  cost  would  be  only  a  frac- 
tional part  of  their  regular  wages. 

May  I  urge  you,  through  the  executive  committee  of  the  National  Merchant 
Marine  Association,  to  try  to  put  this  measure  into  the  form  of  a  bill  and  have 


79 

it  presented  promptly  at  the  opening  of  the  next  session  of  Congress.  I  am 
sure  that  Capt.  Donald  of  the  Shipping  Board  and  Capt.  McAllister  would  be 
only  too  glad  to  assist  you  in  any  way  that  they  possibly  can. 

[From  William  Butterworth,  president  Deere  Plow  Co.,  Moline,  111.] 

It  is  my  thought  that  the  best  plan  for  the  Government  to  pursue  in  connec- 
tion with  the  operation  of  the  Government-owned  ships  would  be  to  dispose  of 
them  to  private  owners  on  a  basis  which  would  enable  the  owners  to  run  them 
at  a  fair  profit.  It  might  be  advisable  to  have  some  kind  of  Government 
supervision — the  character  of  the  supervision  and  the  type  of  men  that  should 
go  on  the  board  should  be  very  carefully  considered,  however,  before  any 
legislation  creating  the  board  is  enacted.  The  trouble  with  the  most  of  our 
Government  commissions  is  that  they  are  made  up  of  men  who  are  not 
thoroughly  acquainted  with  the  industry  with  which  they  have  to  deal,  and 
offtimes  they  are  politicians  who  have  very  little  knowledge  of  any  kind  of 
business. 

[From  Charles  S.  Keith,  president  Central  Coal  &  Coke  Co.,  Kansas  City,  Mo.] 

I  beg  to  say  that  of  the  plans  suggested  and  stated  in  your  letter,  in  my 
judgment,  the  proper  one  to  pursue  is  No.  5,  to  wit,  the  Government  should 
sell  the  ships  to  private  shipping  companies,  thus  relinquishing  ownership  and 
control  over  same ;  provided  our  shipping  laws  are  so  amended  and  modified  as 
to  permit  a  privately  owned  merchant  marine  to  be  operated  without  loss  to 
the  owners.  Unless  American  shipowners  are  permitted  to  operate  on  a  basis 
that  will  permit  them  to  meet  the  competition  of  foreign  shipping,  then  the 
only  alternative  is  Government  ownership  and  operation,  with  taxation  of  the 
American  people  to  make  good  the  deficit  arising  from  Government  operation. 

[From  George  W.  Norris,  Federal  Farm  Loan  Bureau,  Treasury  Department,  Washington, 
formerly  port  commissioner  at  Philadelphia.] 

1.  I  am  opposed  to  Government  operation  as  a  general  principle,  and  opposed 
to  it  in  this  particular  case,  unless  it  should  appear  to  be  an  unavoidable  neces- 
sity, in  which  case  I  would  reluctantly  sanction  it,  with  the  hope  that  it  might 
be  abandoned  as  soon  as  possible. 

2.  I  am  opposed  to  operation  by  private  companies  on  a  commission  basis. 

3.  I   am  opposed  to  the  plan  of   turning  over  the  sliips  to  one  large  cor- 
poration, which  would  sell  its  stock  to  the  public  with  a  Government  guaranty 
of  a  fixed  minimum  return. 

4.  I   am   opposed   to   the   sale  of   the   ships   to   private   shipping  companies, 
with  the  exception  that  I  would  be  willing  to  approve  the  sale  of  a  limited 
number   of   ships   where   fair   prices   could   be   realized,   and   where   the   pur- 
chasers   would    consent    to    reasonable    Government    supervision    as    to    their 
operation.     My   objections   to   the   sale   of   all   or   a   large  part   of   the   ships 
are:    (1)    The    offering   of    such    a    large    number    of   ships    for    sale    would 
have   a    prejudicial    effect    upon    the    shipbuilding    interests    in    this    country. 
(2)    If   minimum   prices    were    not    fixed,    the    Government    would    suffer    an 
unnecessarily  heavy  loss.    If  minimum  prices  were  fixed,  and  fixed  at  a  reason- 
able basis,  I  doubt  whether  many  sliips  would  be  sold  to  be  operated  with  any 
reasonable  degree  of  Government  supervision.     (3)   I  believe  that  to  get  these 
ships  ofiicered  and  manned  by  American  seamen  it   will  be  necessary  to  pay 
better    wages,    and    give    better    living    conditions    than    generally    prevail    on 
foreign    ships.      This    would    either    make    it    impossible    for    the    purchasers 
to  man  them  with  American  officers  and  seamen,  or  would  handicap  them  if 
they  did  so.    I  do  not  believe  that  Congress  would  vote  for  any  form  of  subsidy 
payable  to  ship  operators.     It  therefore  seems  to  me  to  be  advisable  that  the 
ships  should  be  officered  and  manned  by  men  who  constituted  a  Naval  Reserve 
Force,  and  were  paid  by  the  Government.     (4)  In  view  of  the  large  amount  of 
capital  that  would  have  to  be  raised  in  connection  with  the  mere  operation  of 
Government-owned  ships.  I  do  not  see  the  advantage  of  adding  the  additional 
burden  of  even  one-fourth  of  the  purchase  price  of  the  ships. 

5.  I  favor  the  continuance,  for  the  present  at  least,  of  Government  owner- 
ship, the  ships  to  be  chartered  to  private  shipping  companies  to  be  operated 
upon  their  own  account   on   "  time  charter,"  the   Government  furnishing  the 
crews  and  stores.     This  minimizes  the  ninount  of  private  capital  required  to 
be  raised;  builds  up  a  Naval  Reserve  Force,  the  members  of  which  could  be 


80 

used  alternately  on  merchant  and  naval  vessels ;  and  will  secure  for  the  Govern- 
ment, if  properly  administered,  all  the  return  that  it  can  fairly  expect. 

These  are  my  views  to-day,  subject  to  revision  or  change  in  the  light  of  further 
discussion  and  information. 

[From  W.  R.  Ingalls,  New  York  City.] 

I  am  strong  in  my  conviction  that  Government  ownership  and  Government 
operating  of  public  utilities  should  be  limited  to  the  minimum,  and  especially 
no  entry  of  the  Government  into  commercial  business  should  be  promoted. 
The  experiences  of  both  the  American  and  British  Governments  in  operating 
railways  and  telegraphs  are  sufficient  object  lessons. 

Consequently  I  am  in  favor  of  the  fifth  plan  suggested  in  your  letter,  namely, 
that  the  Government  should  sell  the  ships  to  private  shipping  companies, 
charge  up  the  loss  to  war  expense,  and  get  out  of  the  shipping  business  en- 
tirely. Let  me  add  to  this  that  there  should  be  new  legislation  that  will  per- 
mit private  shipping  companies  to  operate  in  competition  with  foreign  shipping 
companies  and  in  conformity  with  the  principles  of  economic  law. 

[From   Peter   O.    Knight,   Knight,    Thompson   &   Turner,    Tampa,    Fla.] 

I  have  given  this  matter  some  thought  and  agree  with  you  fully  that  there 
is  no  question  before  the  American  people  of  more  urgent  importance  than 
that  of  determining  how  our  fleet  shall  be  disposed  of  and  operated.  The 
question  of  how  the  fleet  shall  be  disposed  of  is  of  comparatively  easy  solu- 
tion ;  but  what  we  are  going  to  do  in  order  to  enable  American  citizens  to 
operate  a  ship  under  the  American  flag  in  competition  with  the  shipowners 
of  other  countries,  is  something  else.  I  am,  of  course,  opposed  to  Governmental 
ownership,  of  ships  or  anything  else.  Governmental  ownership  means  incom- 
petence, waste,  extravagance,  and  inefficiency.  The  practical  and  capable  men 
to-day,  with  few  exceptions,  are  in  private  life  and  not  in  governmental  ser- 
vice, city,  country,  State  or  national.  The  ships  should,  of  course,  be  sold  to 
American  citizens,  either  individuals  or  corporations ;  and  that  should  be  done 
as  quickly  as  possible.  But  when  that  is  done,  then  the  serious  question  arises 
as  to  how  the  shipowners  are  going  to  operate  them  under  the  American  flag. 
I  have  run  around  a  good  many  circles  mentally  in  trying  to  arrive  at  some  solu- 
tion of  this  question  the  last  year,  and  I  have  not  yet  arrived  at  any  definite 
conclusion.  I  am  inclined  to  think,  however,  that  either : 

(1)  All  of  the  restrictive,  regulatory,  burdensome  legislation  that  places  the 
shipowner  of  this  country    at  a  disadvantage  as  compared  with  the  shipowner 
of  foreign  countries,  must  be  repealed,  and  the  shipowner  of  this  country  left 
free  to  employ  such  labor  as  he  sees  fit,  paying  such  wages  as  he  and  his  em- 
ployees can  agree  upon,   and  operate  his  ships  under  such  conditions  as  his 
ingenuity  and  ability  will  suggest ;  or 

(2)  That  such  legislation  must  be  passed  by  Congress  along  the  lines  of 
our  coastwise  legislation   that  will   make  it  cheaper  for  Americans  to  ship 
their  produce  and  merchandise  in  American  bottoms  than  in  foreign  ones ;  or 

(3)  If  the  present  restrictive,  burdensome,  regulatory  legislation  is  to  re- 
main in  force,  that  the  Government  must  in  some  way  or  other  provide  a 
subsidy  to  make  good  the  losses  that  the  American  shipowner  will  suffer  by 
reason  of  his  attempt  to  operate  his  ships  under  the  American  flag  in  competi- 
tion with  the  foreign  shipowner.     If  it  is  defensible,  under  our  system  of  gov- 
ernment, to  provide  for  a  protective  tariff  whereby  tribute  is  laid  upon  every 
man,  woman,  and  child  in  the  United  States  to  enable  the  manufacturer  to 
pay  the  wages  that  are  now  being  paid  in  this  country  and  still  compete  with 
manufacturers  of  other  countries,  then  it  is  defensible  to  levy  a  like  tribute 
upon  the  people  of  this  country  to  make  good  the  losses  that  the  American  ship- 
owner will  suffer  if  we  are  to  have  a  permanent  American  merchant  marine. 

One  or  the  other  of  the  three  above-named  methods  must  be  adopted.  Which 
is  best  for  the  country,  I  do  not  know.  I  have  some  positive  views  about  it ; 
but,  on  account  of  the  labor-union  situation  in  this  country,  I  expect  it  will 
be  quite  hard  to  have  the  ordinary,  modern,  American  politician  undertake  to 
put  them  into  force.  There  is  one  thing,  however,  that  I  do  know,  and  that 
is  that  the  road  ahead  for  the  establishment  of  a  permanent  American  mer- 
chant marine  is  anything  but  clear. 


81 

[From  P.  A.  S.  Franklin,  president.  International  Mercantile  Marine  Co.,  New  York  City.] 

I  am  strongly  in  favor  of  the  last  of  the  five  plans  which  you  suggest^ 
namely  : 

"  Lastly,  the  Government  could  sell  the  ships  to  private  shipping  companies, 
thus  getting  out  of  the  shipping  business  entirely." 

We  are  convinced  that  the  only  way  to  establish  and  operate  a  successful 
American  merchant  marine  is  on  the  basis  of  private  ownership  and  opera- 
tion. Unlike  a  business  being  conducted  wholly  within  our  country  the  mer- 
chant marine  must  compete  with  every  nation,  and  to  do  this  successfully  it  is 
essential  that  private  initiative  and  the  spur  of  financial  success  shall  be 
applied. 

It  should  be  the  aim  of  the  Government,  therefore,  to  sell  the  fleet  which  has 
been  built  and  is  building,  to  private  operators,  as  promptly  as  possible,  and 
further,  every  effort  should  be  made  to  encourage  and  increase  the  number  of 
investors  in  the  shipping  business.  At  the  same  time  the  operations  of  the 
private  operator  should  be  as  free  from  restrictions  and  restraint  as  those  of 
our  foreign  competitors. 

One  of  the  greatest  difficulties  which  confront  the  American  operator  is  that 
of  obtaining  the  necessary  capital  to  carry  on  his  business.  In  the  case  of 
our  foreign  competitors  shipping  investments  are  well  known  and  operators  can 
obtain  capital  from  a  large  number  of  sources.  In  this  country,  on  the  con- 
trary, shipping  investments  are  almost  unknown,  and  operators  able  to  supply 
good  security,  and  with  the  best  financial  standing,  find  it  most  difficult  to 
get  the  necessary  capital. 

Under  these  circumstances  it  seems  most  important  that  a  plan  which  is 
designed  to  place  the  fleet  under  private  ownership  and  operation  should  also 
provide  a  sufficiently  attractive  basis  so  that  investments  in  shipping  may  be 
stimulated  throughout  the  country.  Without  some  encouragement  to  the  in- 
vestor the  development  of  our  merchant  marine  through  private  channels  will 
be  seriously  restricted. 

The  merchant  marine  of  the  United  States  should  be  as  free  from  regula- 
tion and  restriction  as  the  merchant  marine  of  our  competitors.  This  is  most 
essential  if  we  are  to  compete  on  equal  terms.  Any  limitation  of  rates  or  any 
direct  representation  by  the  Government  in  the  affairs  of  the  shipping  company 
will  mean  a  corresponding  loss  in  the  ability  to  compete  on  equal  terms. 

We  think  that  the  plan  proposed  by  Mr.  J.  Parker  Kirlin,  copy  of  which  we 
inclose,  covers  completely  and  satisfactorily  the  various  necessities  of  the 
case  and  we  strongly  urge  its  adoption. 

I  Suggestions  for  a  governmental  policy  toward  the  merchant  marine,  presented  to  Senator 
Ransdell's  Merchant  Marine  Conference,  Jan.  22,   1919.] 

I.  The  Government  should  adhere  to  its  policy,  declared  in  the  United  States 
shipping  act,  approved  September  7,  1916,  to  encourage,  develop,  and  create  a 
merchant  marine  to  meet  the  requirements  of  the  commerce  of  the  United  States 
with  its  territories  and  possessions  and  with  foreign  countries. 

II.  It  should  adhere  to  and  emphasize  its  policy,  as  declared  in  the  shipping 
act  of  September  7,  1916,  and  the •  emergency  shipping  fund  act   (part  of  the 
urgent  deficiencies  appropriations  bill,  approved  June  15,  1917,  and  the  act  to 
prescribe  charter  rates  and  freight  rates  and  to  requisition  vessels,  approved 
July  18,  1918,  of  withdrawing  from  Government  ownership  and  operation  of 
ships  and  the  fixing  of  freight  rates  in  foreign  trade,  so  soon  as  this  can  be  done 
with  due  regard  for  national  interests. 

The  periods  of  time  limited  by  the  previous  legislation  above  referred  to  are 
six  months  after  the  declaration  of  peace  under  the  first  two  statutes;  and  at  the 
time  of  the  declaration  of  peace,  or  in  the  discretion  of  the  President,  within 
nine  months  after  the  declaration  of  peace,  under  the  last-named  act. 

III.  The  decision  of  Congress  not  to  interfere  with  or  attempt  to  regulate 
normal  freight  rates  was  reached  in  connection  with  the  passage  of  the  act  of 
September  7,  1916.     The  decision  then  arrived  at,  after  protracted  hearings, 
was  that  the  regulation  of  freight  rates  in  foreign  commerce  was  inexpedient, 
and  the  bill  was  so  altered  during  its  passage  as  to  strike  out  the  proposal  which 
it  originally  embodied  to  regulate  such  rates. 

The  conclusion  reached  and  embodied  in  the  act  was  that  public  safety  re- 
quired no  more  than  the  enactment^  of  the  provisions  of  sections  16  and  17  of 
the  act,  which  prohibit  a  common  carrier  by  water — 

121034—19 6 


82 

(1)  From  giving  undue  preference  or  advantage  to  any  one  person,  locality,  or 
description  of  traffic; 

(2)  From  using  unfair  means  and  devices  to  obtain  lower  rates  than  were 
given  to  other  persons  or  localities  similarly  situated ; 

(3)  From  influencing  marine  insurance  companies  to  discriminate  in  rates  of 
insurance  between  vessels  or  cargoes ;  and 

(4)  From  collecting  any  rate  or  charge  which  is  unjustly  discriminatory  be- 
tween shippers  or  ports,  or  unjustly  prejudicial  to  exporters  of  the  United  States 
as  compared  with  their  foreign  competitors. 

The  decision  of  the  Congress  on  this  point  should  be  adhered  to  and  not 
extended.  Any  further  attempt  at  regulation  of  international  rates  will  be 
prejudicial  to  the  interests  of  both  shippers  and  shipowners  in  the  foreign  trade, 
as  imposing  on  such  trade  a  burden  of  regulatory  provision  not  found  in  the  laws 
or  regulations  of  competing  nations. 

IV.  The  ships  suitable  for  foreign  trade  now  constructed  and  owned  by  the 
Shipping  Board,  or  building  under  contract  by  the  Government,  should  be  sold 
and  distributed  to  private  owners  for  management  and  operation  in  foreign 
trade,  on  the  following  terms : 

(1)  Sales  of  such  steamers  should  be  made  by  the  Government  to  American 
companies,  firms,  or  individuals  established  in  foreign  trade,  and  to  such  others 
as  in  the  discretion  of  the  Shipping  Board  are  responsible  and  qualified  to 
operate  ships  in  such  trade,  at  valuations  per  ton,  for  new  ships  to  be  deter- 
mined by  the  Shipping  Board,  now  exceeding,  however,  the  lowest  cost  of  con- 
struction of  similar  tonnage  in  standard  shipbuilding  yards  of  our  principal 
competitors,  and  at  similar  valuations  for  used  ships,  less  the  usual  allowance 
for  depreciation  for  age. 

(2)  Payment  of  such  price  should  be  made  to  the  extent  of  25  per  cent  in 
cash,  the  remaining  75  per  cent  to  stand  on  mortgage  at  4  per  cent  interest, 
payable   in    fixed   installments,    apportioned    over   a   period   of   20   years,    the 
mortgage   to    contain    provisions    for    the   establishment   of   sinking   funds   to 
amortize  the  mortgage  within   such   period,   and   the  purchaser  to  have   the 
privilege  of  paying  off  any  part,  or  the  whole,  of  the  remainder  of  such  mortgage 
on  any  interest  date,  at  par. 

(3)  The  mortgage  law  should  be  revised  so  as  to  constitute  the  mortgage  a 
first  lien  on  the  ship,  subject  only  to  liens  for  salvage,  general  average  and  the 
wages  of  seamen. 

(4)  Any  residue  of  shipping  in  the  hands  of  the  Government  not  purchased 
by  private  owners  should  be  allocated  for  management  and  operation,  so  far 
as  may  be  reasonably  practicable,  to  such  companies,  firms  or  individuals  as 
shall  purchase  ships  from  the  Government,  in  the  proportion  to  which  ships 
shall  be  purchased  from  the  Government  by  such  companies,  firms,  or  individ- 
uals, due  regard  being  had,  in  the  division  of  the  types  of  ships,  to  the  trades 
of  such  corporations,  firms,  or  individuals. 

A  commission  should  be  allowed  to  the  operating  corporation,  firm,  or  individ- 
ual, and  the  remaining  income  derived  from  the  operation  of  the  ships  should  be 
consolidated  with  the  earnings  of  all  the  other  ships  owned  by  the  operating 
corporation,  firms,  or  individual,  and  the  proportion  of  such  consolidated  earn- 
ings which  the  operated  tonnage  bears  to  the  owned  tonnage  of  the  operating 
corporation,  firm  or  individual  should  be  paid  over  to  the  United  States. 

The  Shipping  Board  already  has  authority,  under  sections  20  to  32,  inclusive, 
of  the  United  States  shipping  act  of  September  7,  1916,  to  make  such  examina- 
tion of  the  books  and  accounts  of  the  operating  managers  as  will  enable  it  to 
be  satisfied  of  the  accuracy  of  the  sums  to  be  accounted  for  as  the  Government's 
proportion  of  the  consolidated  earnings  as  aforesaid. 

V.  All  corporations,  firms,  or  individuals  who  shall  purchase  or  operate  ships 
in  the  foreign  trade  in  pursuance  of  the  foregoing  plan,  should  be  exempt,  in 
respect  of  such  ships  or  the  other  ships  now  owned  or  hereafter  acquired  by 
them  and  employed  in  foreign  commerce,  from  all  Federal  and  State  taxes 
upon  their  capital  stock,  ships,  franchises,  profits  or  earnings,  for  a  period  of 
20  years,  and  for  such  further  period  as  the  legislation  may  remain  unchanged. 

(NOTE. — This  provision  corresponds  with  the  law  of  the  State  of  New  York 
as  regards  State  taxes  (60  Consolidated  Laws,  New  York,  1909,  sec.  4,  subdi- 
vision 12),  which  has  been  in  force,  with  various  alterations  as  to  periods  of 
time,  since  June  1,  1881.  A  similar  law  exists  in  California.) 

VI.  The  Government  should  enact  some/special  legislation  to  assist  existing 
passenger  lines  in  the  construction  and  operation  of  new  passenger  tonnage  of 
the  highest  class  and  latest  design  and  type,  and  to  develop  additional  passen- 


83 

ger  lines  to  countries  with  which  it  is  desirable,  in  the  national  interest,  that 
direct  passenger  service  should  be  established.  Some  scheme  similar  to  that 
adopted  by  the  British  Government  in  the  building  of  the  Mauretania  and 
Lusitania  might  be  expedient.  The  mail  subsidy  laws  should  be  revised  to  meet 
the  additional  costs  of  reconstructing  and  operating  such  lines,  as  compared 
with  costs  of  foreign  competitors,  and  to  adapt  the  mail  grants  to  the  speeds 
economically  practicable  in  the  several  trades. 

VII.  Provision  should  be  made  for  the  incorporation  under  a  general  Federal 
incorporation  law,  of  steamship  companies  operating  in  foreign  or  interstate 
commerce. 

[From  John  H.  Kirby,  president,  National  Lumber  Manufacturers  Association,  Houston, 

Tex.] 

Your  letter  is  very  interesting  and  the  several  plans  you  have  outlined  for 
the  operation  of  an  American  merchant  marine  should  have  careful  consid- 
ration. 

I  think  I  reflect  a  deliberate  judgment  and  wish  of  the  people  of  our  section 
of  the  United  States  when  I  say  we  view  with  apprehension  any  further  cen- 
tralization of  power  at  Washington.  We  do  not  think  our  Government  ought 
to  enter  upon  the  transportation  of  business,  either  land  or  marine.  The  Gov- 
ernment should  stay  in  the  business  of  government  and  not  enter  any  of  the 
fields  of  private  enterprise.  The  Government  is  incapable  of  conducting  private 
enterprise  as  economically  and  effectively  as  the  citizen  can,  a  fact  which  is 
almost  universally  accepted  by  thoughtful  men  who  have  any  real  comprehension 
of  the  fundamental  purposes  and  functions  of  the  character  of  Government 
created  under  our  Constitution. 

The  Government  should  sell  its  ships  as  promptly  as  possible  to  private 
ownership,  under  guaranty  for  the  continuous  operation  of  such  ships  on  such 
routes  and  in  such  waters  as  may  be  helpful  in  promoting  our  commerce,  receiv- 
ing such  price  for  the  ships  as  may  be  obtainable  and  basing  the  payments  on 
such  terms  as  will  encourage  citizens  to  acquire  them  and  to  operate  them. 

The  more  promptly  our  Government  can  sell  the  ships  to  private  shipping 
companies  or  to  citizens  and  thus  get  out  of  the  shipping  business  itself,  the 
more  surely  will  the  public  good  be  safeguarded  and  an  American  merchant 
marine  capable  of  meeting  our  needs  assured  for  both  the  present  and  future." 

[From  Holden  A.  Evans,  president,  Baltimore  Dry  Docks  &  Shipbuilding  Co.,  Baltimore, 

Md.] 

Regarding  the  plans  suggested  in  your  letter,  numbers  1  and  2  are  opposed 
by  practically  all  business  men.  This  being  the  case,  I  do  not  feel  it  necessary 
to  comment  other  than  to  state  that  I  am  most  emphatically  opposed. 

I  am  very  much  in  favor  of  plan  No.  3 ;  that  is,  "  Government  ownership  to 
continue,  but  the  ships  to  be  chartered  to  private  shipping  companies  to  be 
operated  for  their  own  account.  This  could  be  on  a  "  bare-boat "  or  a  "  time- 
form  "  basis. 

My  idea  regarding  this  plan  is  that  the  vessels  should  be  leased  or  chartered 
for  a  period  of  three  years  to  companies  with  substantial  financial  backing, 
and  that  these  companies  should  b.e  required  to  give  bond  to  the  Government 
covering  their  contract.  No  more  than  200,000  deadweight  tons  should  be 
leased  to  any  one  company.  The  charter  rate  should  be  such  that  the  new  com- 
panies which  are  more  or  less  inefficient,  owing  to  their  lack  of  experience  in 
operation,  could  make  a  small  profit.  Of  course,  efficient  companies  would 
necessarily  make  a  larger  profit. 

After  the  three  years,  if  the  vessels  chartered  have  been  operated  to  the 
interests  of  the  United  States  as  a  whole,  and  the  companies  have  fulfilled  all 
of  their  obligations  to  the  Government,  the  companies  operating  should  have 
the  option  of  purchase  at  the  then  market  rate.  Provision,  however,  should  be 
made  that  the  vessels  could  not  be  transferred  to  a  foreign  flag  for  a  period  of, 
say.  5  years. 

This  scheme  appeals  to  me  most  strongly.  The  building  up  of  an  American 
merchant  marine  is  a  most  complex  subject  and  will  require  much  study.  I 
doubt  if  you  were  to  obtain  the  services  of  six  of  the  best  men  in  this  country 
to  study  the  subject,  that  they  would  be  able  in  six  months  or  a  year  to  bring 
in  a  satisfactory  scheme  for  building  and  operating  such  a  marine. 

We  have  had  so  little  experience  in  this  country  both  in  building  and  operat- 
ing, that  we  are  just  beginners  in  the  game.  With  the  three  years  that  these 


84 

vessels  are  leased  we  will  gain  much  experience  in  building  and  operating  and 
world  markets,  and  this  experience  is  needed  to  tell  what  is  best  to  be  done  to 
build  up  and  maintain  a  lasting  American  merchant  marine. 

Public  opinion  must  also  be  educated  in  order  that  we  can  obtain  necessary 
legislation  to  meet  foreign  competition  and  the  requirements  of  an  American 
service.  By  chartering  these  vessels  in  lots  not  to  exceed  20,  companies 
with  strong  financial  backing  will  be  organized  all  over  the  country  and  the 
interests  of  the  communities  in  the  interior  will  be  turned  toward  shipping. 
In  no  other  way  can  we  obtain  substantial  interest  and  substantial  influence 
from  the  interior. 

Scheme  No.  4  listed  in  your  letter  will  not,  I  believe,  obtain  much  support 
from  business  men. 

Scheme  No.  5,  namely :  "  Lastly,  the  Government  could  sell  the  ships  to 
private  shipping  companies,  thus  getting  out  of  the  shipping  business  entirely," 
appears  to  be  in  much  favor,  particularly  with  certain  interests  and  with  the 
present  ship-owning  companies.  It  appears  to  me  that  there  are  serious  objec- 
tions to  this  scheme,  namely: 

(A)  It  would  be  necessary  for  all  ships  to  be  sold,  otherwise  prospective 
operators  would  not  care  >to  buy,  fearing  Government  competition   from  the 
unsold  ships.     This  would  require  very  large  financing,  and  the  present  time 
is  not  a  propitious  one  for  such  financing. 

(B)  The  price  at  which  these  ships  could  be  sold  would  be  far 'below  the 
cost  to  the  Government.    Citizens  of  the  interior  are  not  familiar  with  the  con- 
ditions, and  should  these  ships  be  sold  with  enormous  losses  to  the  Govern- 
ment it  will  make  a  very  bad  impression  in  the  interior  and  charges  will  be 
made  of  jobbing,  and  it  will  give  many  talking  points  for  every  interior  small- 
minded  Congressman  to  attack  the  merchant  marine  and  our  shipping  policies. 
In  other  words,  it  will  have  a  very  bad  political  effect. 

(C)  It  is  most   important  that  the  ships  now  owned  by   the   Government 
should  be  operated  for  the  interests  of  the   United   States  as  a  whole   nml 
not  be  operated,  dominated,  or  influenced  from  London  or  by  British  interests, 
I  greatly  fear  that  should  these  ships  be  sold  off  immediately,  that  although 
they  might  be  sold  to  American  companies  and  operated  as  American  ships, 
they  will  be  dominated  by  British  influence. 

(D)  Should  these  ships  be  sold  at  market  prices  at  present,  it  will  prac- 
tically close  every  American  shipyard,  except  those  engaged  upon  naval  work. 
If  these  ships  are  sold  they  will  bring  not  more  that  $75  to  $100  a  ton.     It 
will  cost  the  American  builder  under  present  conditions  from  $150  to  $180  per 
ton  to  build  ships,  depending  upon  variation  in  efficiency  of  the  shipyards  and 
the  type  of  ship.     It  stands  to  reason  that  no  one  will  place  orders  for  ships 
at  this  price,  knowing  that  they  must  compete  with  ships  sold  by  the  Gov- 
ernment at  prices  far  below  the  cost  to  build. 

(E)  Selling  these  ships  at  the  present  time  will  prevent  further  develop- 
ment of  the  American  merchant  marine  and  expansion  of  our  commerce,  for 
instance:   suppose  that  a   year  after  the   ships  are   sold,   a   group   of  manu- 
facturers see  an  opportunity  to  develop  trade  in,    say,   South   America,   and 
to  dispose  of  their  products,  and  they  desire  to  operate  their  own  ships  for 
this  purpose.     If  they  attempt  to  build,  they  will  have  to  pay  shipyard  prices 
and  compete  with  ships  owned  by   companies  which   have  paid   Government 
prices.     It  is  quite  obvious  that  it  will  be  impossible  for  them  to  do  this. 

I  should  be  very  glad  to  have  you  go  over  the  notes  submitted  you  above, 
and  if  there  are  any  points  which  I  can  explain  or  go  into  more  fully,  please 
let  me  know. 

[From  Robert  Dollar,   The  Robert  Dollar  Co.,   San   Francisco,   Calif.] 

I  am  very  decided  in  my  opinion  that  there  is  only  one  way  to  successfully 
handle  the  ships  the  Government  has,  and  that  would  be  to  sell  them  to  private 
ownership  at  the  same  price  ships  can  be  bought  in  England  for,  and  to  give 
liberal  terms  so  that  small  owners  can  purchase  the  ships  and  get  up  a  com- 
munity of  ship  owners  the  same  as  we  had  in  the  New  England  States  a 
hundred  years  ago,  which  made  America  famous  in  the  shipping  world.  As 
to  our  Government  going  into  operate  the  ships  in  the  foreign  trade  without 
organizations  in  foreign  countries  would  simply  be  a  joke.  For  the  Govern- 
ment to  own  the  ships  and  charter  them  to  individuals,  would  help  some,  but 
in  the  end,  the  real  thing  is  actually  ship  owning. 


85 

[From  E.  T,  Chamberlain,  Washington,  D.  C.] 

The  council  of  the  National  Merchant  Marine  Association  in  framing  sug- 
gestions to  Congress  for  a  merchant  marine  policy  in  the  interest  of  the 
American  people  will  recognize  doubtless  that  the  state  of  the  finances  of  the 
country  will  control  the  decision  by  Congress. 

I.  Government  ownership  and  operation  of  ships  and  Government  shipbuild- 
ing will   be  determined  by  the  appropriations  committees  of  the  House  and 
Senate,   for   the  policies   require   heavy   and   continued   appropriations,   which 
naturally  will  be  taken  up  early  in  the  session.     The  Government  should  set  the 
example  of  rigid  economy. 

II.  Peace  will  find  us  with   two  immense  Government   maritime  establish- 
ments on  hand : 

(« )  Shipping  Board  ships  operated  by  or  for  the  Government. 

(6)   Shipping  Board  investments  in  shipyards  and  contracts  for  ships. 

These  establishments  were  erected  to  win  the  \var  and  are  founded  upon 
Liberty  bonds  and  war  taxes.  Commercial  considerations  were  entirely 
subordinated  in  their  creation,  and-  financial  obligations  amounting  to  about 
$8,500,000,000  were  assumed  by  Congress  as  a  war  measure  without  regard  to 
commercial  policies. 

III.  Government  ownership  and  operation  as  systems  lend  themselves  to  ship 
ownership  and  operation  on  a  large  scale  less  readily  than  to  any  other  form 
of  commercial  activity  I  know  of. 

IV.  P'or  these  reasons,  I  favor 

(1)  The  sale  to  private  shipowners  as  soon  as  it  can  be  effected  of  all 
the  ships  of  mercantile  types  now  owned  by  the  Shipping  Board.     Over  300 
ships  building  or  contracted  for  by  private  owners,  American  and  foreign,  were 
requisitioned  or  seized  by  the  Shipping  Board  to  win  the  war,  and  a  scrupulous 
Government,  having  in  view  both  the  necessity  which  was  affirmed  in  support 
of  that  action  and  our  commercial  reputation  hereafter,  it  seems  to  me,  should 
at  once  undertake  mutually  satisfactory  arrangements  with  such  owners  con- 
cerning such  ships. 

(2)  The  proceeds  of  these  sales  should  be  applied  to  payments  on  unfinished 
ships  now  so  far  progressed  toward  completion  that  the  loss  in  finishing  them 
will  be  less  than  in  stopping. 

(3)  Partially  built  Shipping  Board  ships  or  contracts  to  build  should  be  sold 
to  private  owners  as  far  as  practicable,  and  the  proceeds  applied  as  in  2. 

(4)  Shipyards  should  be  allowed  as  soon  as  possible  to  contract  to  build 
ships  for  private  American  or  foreign  owners  (excluding  Germans). 

V.  I  realize  it  is  easy  to  make  general  suggestions  like  the  above  but  very 
hard  to  carry  them  out  in  detail.    But  the  choice  between  a  merchant  marine, 
conducted  on  merchantile  principles,  on  the  one  hand,  and  on  the  other  a  Gov- 
ernment institution  ought  to  be  made  at  the  coming  session  of  Congress.    Gov- 
ernment ownership  and  operation  of  ships  and  private  ownership  and  opera- 
tion can  not  exist  concurrently.    If  the  present  system,  doubtless  necessary  for 
the  prosecution  of  the  war,  is  maintained  by  bond  issues  and  war  taxes  through 
a  year  of  peace  it  will  take  root,  with  all  its  attendant  disadvantages,  as  a  per- 
manent Government  institution.    The  council  should  affirm  in  the  plainest  and 
most  direct  fashion  that  the  Government  should  stop  as  soon  as  possible  operating 
and  building  ships  for  trade,  foreign  or  coasting,  selling  the  ships  and  settling 
the  contracts. 

Second  stage. — An  authoritative  statement  of  general  policy,  as  outlined  above, 
and  measures  by  the  appropriations  committee  to  give  it  effect,  come  first.  The 
questions  of  the  second  stage  are 

(a)  Can  Americans  build  ships  in  competition  with  other  nations?  This 
can  be  determined  by  giving  our  shipyards  a  chance  to  try,  .and  now  is  the 
best  time  when  the  yards  are  in  the  best  shape,  certainly  as  compared  with 
foreign  yards,  and  the  demand  for  ships  is  active. 

(6)  Can  Americans  operate  ships  in  foreign  trade  in  competition  with  ships 
under  other  flags?  The  sooner  the  effort  is  made,  the  sooner  shall  we  know 
affirmatively  by  experience  our  advantages  and  disadvantages. 

For  several  years  ships  of  .all  nations  have  been  working  in  uniform  and 
under  orders  of  Government  ownership  or  control,  to  win  a  war,  which  in  the 
meantime  has  made  immense  relative  changes  in  the  volume  and  distribution 
of  shipping,  of  wealth,  and  of  conditions  of  exchange  of  commodities.  For  one 
I  have  neither  the  foresight  nor  the  hardihood  when  everything  here  and 
abroad  is  still  tied  up  with  Government  regulations,  based  on  war  conditions, 


86 

to  predict  just  how  the  changes  in  the  controlling  factors  of  maritime  affairs 
in  the  past  four  years  can  best  be  employed  to  enlarge  or  preserve  the  opportu- 
nities for  the  enterprise  and  skill  of  our  people  in  building  and  sailing  ships. 

On  one  point,  however,  I  am  quite  clear,  the  American  ocean  mail  service 
should  be  extended  and  improved.  This  is  a  legitimate  field  for  Government 
cooperation  and  has  been  accepted  as  such  for  over  half  a  century  by  all  mari- 
time nations  and  by  men  of  all  parties  here.  Improvement  has  been  needed  for 
years. 

In  a  general  way  the  shipping  scheme  outlined  by  J.  P.  Kirlin,  at  the  first 
meeting  of  the  Association,  seems  to  me  the  most  comprehensive  I  have  seen, 
and,  so  far  as  general  action  in  the  next  five  or  six  months  may  be  needed,  it 
lays  down  the  lines  for  consideration. 

You  will  understand  that  the  suggestions  above  are  all  personal  and  offered 
as  a  member  of  the  council  to  comply  with  your  request.  Under  the  very 
proper  rule  of  the  department,  I  am  not  at  liberty  to  express  as  Commissioner 
of  Navigation  opinions  on  general  policy  without  consulting  the  Secretary  of 
Commerce,  and  I  can  not  ask  him  to  take  the  time  now  to  discuss  with  me  the 
suggestions  above." 

[From  George  S.  Dearborn,  president,  American-Hawaiian  Steamship  Co.,  l^ew  York  City.] 

At  the  conference  called  by  Senator  Ransdell  and  held  January  22  and  23 
of  this  year,  Mr.  Kirlin  submitted  a  plan  in  which  my  views  regarding  a  ship- 
ping policy  were  fully  covered  and  do  not  believe  I  could  do  better  than  to 
refer  you  to  that  plan. 

[From   Hendon    Chubb,   Marine   Insurance   Underwriter,   New   York   City.] 

I  think  this  can  best  be  considered  under  two  headings  which  fire  very  closely 
related : 

I.  The  disposition  or  operation  of  the  present  war  fleet. 

II.  A  general  policy  for  the  mercantile  marine  in  the  future. 

First.  I  feel  very  sure  that  Government  operation,  if  tried,  is  bound  to  be  an 
expensive  failure  and  that  steamship  property  lends  itself  less  to  Government 
operation  than  almost  any  other  class  of  property.  I  think  it  equally  certain 
that  operation  by  private  interests  under  any  plan  of  commission  or  compen- 
sation for  services  can  not  be  really  efficient.  I  know  from  experience  that  the 
shipowner  can  discount  the  future  and  reap  quick  profits  at  the  expense  of 
the  property  operated  to  an  extent  quite  unappreciated  by  those  without  ship- 
ping experience. 

I  therefore  feel  that  in  considering  what  is  to  be  done  with  the  war  fleet 
one  of  the  following  plans  should  be  followed : 

(a)  The  fleet  soltl  to  approved  American  private  owners  on  a  part  payment 
plan  extending  over  not  more  than  10  years.     The  price  fixed  should  be  based 
upon  the  cost  of  reproduction  in  the  shipyards  of  the  world  and  the  difference 
between  that  and  cost  marked  off  as  a  war  expenditure. 

(b)  Chartered  to  approved  American  charterers  on  bare  boat  basis  for  a  term 
of  years,  the  charter  to  contain  suitable  guarantees  as  to  physical  upkeep  of 
the  boat  based  upon  periodical  classification  surveys. 

The  first  plan  has  much  to  commend  it,  particularly  that  it  will  remove  the 
threat  of  Government  competition  which  \vhile  it  exists  must  have  a  deterrent 
effect  upon  private  enterprise  and  prevent  the  development  of  efficient  organiza- 
tions, but  there  are  two  objections  that  need  to  be  specially  considered : 

(a)  Could  this  large  tonnage,  even  at  a  price  ascertained  as  suggested,  be 
absorbed  by  people  qualified  to  run  it  so  that  it  will  be  an  economic  asset  to 
the  Nation? 

(5)  Because  of  the  large  amount  of  tonnage  to  be  handled  it  is  impossible 
to  sell  these  vessels  on  a  competitive  basis  and  price  will  have  to  be  fixed  which 
would  be  based  largely  upon  the  present  cost  of  reproduction  in  the  shipyards  of 
the  world,  but  such  reproduction  is  for  a  future  date,  whereas  these  boats  would 
be  available  to  the  owners  at  once,  and  by  reason  of  the  present  freight  situa- 
tions the  owners  should  make  a  very  large  profit,  and  this  out  of  vessels  that 
have  been  sold  at  a  loss  to  the  Nation.  I  very  much  doubt  whether  the  public 
would  be  willing  to  accept  such  a  program  did  they  fully  understand  it,  and  yet 
I  find  it  hard  to  suggest  an  alternative. 

The  second  plan  (ft)  would  make  it  possible  to  incorporate  in  the  charter  a 
provision  that  in  event  of  the  net  profits  of  the  charter  exceeding  a  certain 


87 

sum  there  should  be  a  division  between  the  Government  and  the  owners. 
Assuming  that  such  charters  be  made  for  a  period  of  two  or  three  years,  this 
provision  could  be  arranged  on  a  basis  that  would  be  fair  to  both  parties.  If 
freight  rates  during  that  time  are  unusually  high,  the  inevitable  result  will  be 
an  increase  in'tonnage  in  the  following  period  with  consequent  lower  rates,  and 
there  is  no  unfairness  in  having  the  time  charterer  apportion  to  the  Government 
a  sufficient  percentage  of  these  profits  to  form  a  sinking  fund  for  the  loss  of 
value  caused  by  probable  lower  freight  rates  at  the  expiration  of  the  charter 
term. 

Second — General  policy. — I  believe  this  should  be  based  upon — 

First.  Giving  us  a  sufficient  number  of  vessels  always  under  our  flag  to  act 
as  naval  auxiliaries. 

Second.  To  establish  mail  lines  to  important  points  under  our  flag. 

Third.  To  have  enough  vessels  under  our  flag  to  supply  a  strong  naval 
reserve. 

Fourth.  As  many  other  vessels  under  our  flag  as  can  be  maintained  in  com- 
petition with  other  nations  without  governmental  assistance. 

I  believe  that  the  mortgage  la\v  should  be  revised,  and  that  provision  should 
be  made  so  that  there  should  be  either  no  taxation  on  ships  engaged  in  foreign 
commerce  or  that  it  should  not  exceed  that  of  foreign  competing  nations ;  also, 
that  the  shipping  law  should  be  revised  and  any  disability  that  now  exists 
removed  as  far  as  possible.  I  do  not  believe  it  would  be  practicable  to  modify  to 
any  extent  the  present  seamen's  act,  and  I  think  we  have  to  recognize  that  if  we 
wish  American  vessels  manned  by  American  crews  that  the  scale  of  wages  paid 
mil  be  higher  than  that  of  foreign  countries.  I  think  that  this  can  be  met  by 
allowing  such  crews,  under  proper  restrictions,  to  be  enrolled  in  the  Naval 
Reserve  and  paying  them  sufficient  additional  compensation  as  part  of  the  naval 
forces.  Beyond  an  allowance  for  naval  reserve  crews,  adequate  mail  subsidy  for 
mail  lines  and  special  compensation  for  vessels  enrolled  as  naval  auxiliaries,  I 
do  not  favor  any  subsidy,  direct  or  indirect,  whether  it  be  in  the  shape  of  a 
partial  remission  of  duty  charges  on  shipments  imported  by  such  vessels  or  by 
railroad  rebates. 

While  I  believe  that  a  certain  fleet  is  necessary  as  per  suggestions  Nos.  1  and 
2,  I  do  not  believe  beyond  this  it  is  an  economically  sound  proposition  for  us  to 
force  ourselves  into  the  general  carrying  trade  by  throwing  a  burden  on  the 
taxpayer  or  on  the  community  to  meet  an  increased  cost.  I  think  our  ship- 
owners should  be  given  every  opportunity  to  compete  with  equality,  but  I  do  not 
feel  that  it  is  wise  or  advisable  or  would  make  for  efficiency  if  they  were  pro- 
tected by  indirect  means.  They  will  start  with  the  advantage  of  a  large  tonnage 
available  when  the  tonnage  of  the  world  is  depleted,  and  if  disabilities  are 
removed  this  should  enable  them  to  compete  with  other  nations  in  so  far  as  it 
is  economically  sound  in  the  national  interest  to  do  so. 

The  above  represent  my  general  views  at  the  present  time  but  is  not  intended 
as  my  final  judgment. 

[From  W.  V.   X.   Powelson,   Overseas  Transport  Service,  Xew  York   City.] 

I  have  been  suddenly  called  to  Central  America  and  will  not  return  before 
approximately  June  15.  I  have  done  a  certain  amount  of  work  in  preparing  a 
memorandum  of  my  views  regarding  the  shipping  policy,  but  am  sorry  I  shall 
not  be  able  to  get  it  into  shape  to  send  before  sailing.  It  is  my  judgment  that 
any  plan  that  is  adopted  by  Congress  should  be  one  which  would  insure  that  all 
the  ships  acquired  by  the  United  States  Government  should  be  kept  continually 
in  operation  under  private  management  under  the  American  flag.  As  judged 
t>y  this  standard  all  the  plans  that  I  have  studied  are  defective.  Under  such 
plans  but  a  portion  of  the  ships  would  be  operated  and  I  do  not  think  any  of 
them  furnishes  the  opportunity  of  a  satisfactory  solution  of  our  so-called 
merchant-marine  problem. 

[From  F.  L.  Sanford,  lumber  manufacturer  and  exporter,  Zona,  La.] 

As  to  my  idea  of  a  shipping  policy  for  the  ships  owned  by  the  Government 
would  say  that  I  do  not  believe  we  can  hope  to  compete  upon  the  seas  with 
foreign  cheap  labor,  therefore  it  will  be  necessary  to  overcome  the  difference  in 
•cost  of  operation  in  some  manner.  In  my  opinion  it  would  be  impossible  to  get 
a  ship-subsidy  bill  passed  through  Congress  the  coming  session,  nor  could  we 
hope  to  have  any  tariff  changes  favoring  ships  under  United  States  registry, 


88 

but  I  feel  confident  that  we  could  get  a  bill  through  to  man  these  boats  with  a 
naval  reserve,  feeding  the  men,  this  would  place  the  cost  of  paying  and  feeding 
the  men  on  the  Government  through  the  Navy  Department  and  would  build  up 
the  necessary  force  for  a  Navy  should  we  ever  need  one  again.  Then  the  boats 
should  be  allocated  to  certain  lines  according  to  their  adaptability  for  the  par- 
ticular service  needed,  for  a  period  of  say  three  or  five  years,  theV  should  then 
be  advertised  for  charter  with  the  charter  party  paying  all  port  charges,  re- 
pairs, insurance,  etc.  Many  of  the  smaller  ships  would  no  doubt  show  no  returns, 
while  many  of  the  larger  ones  would  probably  show  a  good  return  on  the  in- 
vestment. 

This  plan  would  enable  the  building  up  of  routes  of  traffic  that  would  not  be 
built  up  under  other  conditions,  as  they  would  not  pay  to  start  with,  and  this 
plan  would  reduce  the  cost  materially  by  absorbing  all  the  cost  of  wages  for 
the  men  operating  the  ship,  and  the  feeding  of  these  men,  in  chartering  at  a 
merely  nominal  figure  the  parties  operating  the  line  would  have  little  investment 
until  such  time  as  the  traffic  was  sufficient  to  make  fair  returns. 

It  wrould  also  be  well  to  have  an  understanding  that  the  parties  chartering 
the  vessels  and  operating  them  for  the  three  or  five  year  period  should  have  the 
right  to  purchase  them  at  the  expiration  of  the  charter  period. 

[From  M.  J.  Sanders,  Federal  manager,  Mississippi- Warrior  Waterways,  New  Orleans,  La.} 

(1)  That  the  Shipping  Board  should  sell  to  purchasers  at  any  reasonable 
price   obtainable,    and   without   unnecessary   restrictions   as  to   flag,   all   such 
vessels,  either  wood  or  steel,  as  expert  shipping  men  consider  are  undesirable 
and  unsuitable  commercially  for  operation  either  in  our  coastwise  trade,  for 
trade  to  nearby  tropical  ports,  or  for  overseas. 

(2)  That  the  desirable  steel  steamers  which  are  too  small  to  meet  conditions, 
in  the  overseas  trade,  either  trans-Atlantic  or  trans-Pacific,  should  be  sold  at 
reasonable  prices  for  further  development  of  our  coastwise  service  and  our 
nearby  tropical  service. 

(3)  That  such  vessels  as  are  desirable  and  suitable  for  overseas  trade  should 
in  part  be  sold  at  equitable  commercial  prices,  with  a  stipulation  against  the 
transfer  of  the  flag  to  any  foreign  power ;  that  a  further  part,  to  be  determined 
after  proper  investigation,  should  be  retained  in  the  ownership  of  the  Emergency 
Fleet  Corporation,  as  representing  the  operating  part  of  the  Shipping  Board,  to 
be  utilized  in  the  development  of  new  trades  under  the  American  flag,  such  as 
can  be  demonstrated  would  furnish  desirable  additional  transportation  where 
there  is  a  lack  of  such  transportation,  and  for  the  proper  development  of  our 
foreign  trade  generally. 

In  some  trades  these  vessels  remaining  in  the  ownership  of  the  Shipping 
Board  could  probably  be  operated  under  time  charter  to  private  parties. 
Whether  this  be  upon  the  "bare  boat"  basis  or  upon  the  well-established  form 
of  time  charter,  is  a  matter  that  experience  will  best  determine. 

Others  of  these  steamers  should  in  my  opinion  be  placed  in  the  hands  of 
responsible  and  thoroughly  experienced  shipping  managers  for  operation  upon 
various  desirable  routes,  as  can  be  demonstrated,  for  the  account  of  the  Ship- 
ping Board  or  the  Emergency  Fleet  Corporation ;  that  is  to  say,  the  Shipping 
Board  would  retain  its  direct  interest  in  the  revenues  and  expenditures  of  the 
actual  operation,  the  shipping  managers  being  given  the  customary  fee  for 
management  and  operation  only. 

I  am  aware  that  these  expressions  are  mere  broad  general  principles,  and  I 
believe  that  any  attempt  to  definitely  determine  elaborate  details  is  undesirable 
until  the  Shipping  Board  has  the  advantage  of  several  years  experience. 

It  is  my  belief  that  there  is  grave  danger  in  the  actual  direct  operation  of 
ships  by  any  governmental  agency,  and  that  therefore,  the  actual  operation  of 
such  ships  as  continue  in  the  ownership  of  the  Government  should  be  left  as  far 
as  possible  in  the  hands  of  the  experienced  private  parties;  and  further  that 
a  definite  policy  against  the  building  of  additional  tonnage  by  the  Government 
should  be  declared. 

[From  T.  F.  Newman,  Cleveland  &  Buffalo  Transit  Co.,  Cleveland,  Ohio.] 

In  my  opinion  the  Government  should  not  undertake  the  operation  of  our 
merchant  marine.  Government  machinery  is  not  adaptable  to.  its  successful 
operation.  If  this  is  true  the  Government  should  dispose  of  the  ships  either 
under  some  form  of  charter  or  sale.  Under  either  of  these  plans,  the  charter 
party  or  purchaser  would  have  to  be  reasonably  assued  of  a  profit. 


89 

My  experience  has  been  that  ships  must  be  well  adapted  lor  the  service 
they  are  to  perform  with  reasonable  initial  cost.  While  I  have  had  very  little 
experience  with  coastwise  or  transoceanic  shipping,  I  am  nevertheless  of  the 
opinion  that  even  with  the  best  of  ships  at  reasonable  initial  cost — it  will 
be  difficult  to  compete  in  many  lines  of  trade  with  our  foreign  competitors. 
This  is  due  partially  to  our  laws,  which  compel  American  vessels  to  incur 
expenses  both  in  maintenance-operation  and  subsistence  of  the  crew,  which  is 
not  required  by  some  of  the  other  governments.  I  would  therefore  suggest 
that  the  ships  now  owned,  or  to  be  hereafter  owned  or  controlled  by  the  United 
States  Shipping  Board,  be  sold  outright  at  price  consistent  with  what  the  same 
property  would  cost  if  purchased  from  standard  shipbuilders  in  foreign  mari- 
time cQuntries.  These  ships  should  be  sold  either  for  cash  or  part  cash,  and 
deferred  payments  secured  by  mortgage  on  the  vessel  or  vessels  sold  at  a 
reasonable  rate  of  interest. 

I  would  sell  the  vessels  either  to  corporations,  firms,  or  individuals,  paying 
attention  to  the  character  and  ability  of  the  purchasers — to  operate  ships  suc- 
cessfully. The  Government  could  then,  in  my  opinion,  \vell  afford  to  guarantee 
to  the  purchaser  a  certain  minimum  return  on  the  investment,  possibly  not 
over  2£  or  3  per  cent,  which  would  be  the  incentive  to  purchase  and  operate. 
The  Government  guarantee  should  run  for  a  period  of  at  least  10  years  and 
perhaps  15  or  20  would  be  better.  Under  this  plan  the  Government  would  only 
have  to  make  good  its  guarantee  in  the  event  that  the  vessels  did  not  show  a 
profit  equal  to  the  guarantee,  after  proper  operation,  both  as  to  expenses  and 
up-keep,  together  with  interest  on  the  investment.  Of  course,  the  whole  opera- 
tion would  have  to  be  surrounded  by  a  proper  system  so  that  the  Government 
could  be  at  all  times  fully  informed  as  to  the  operation,  maintenance,  and 
expense  of  ships  thus  sold.  I  believe  under  some  such  plan  as  this,  more 
vessels  would  be  sold  and  operated  than  any  other  plan,  and  in  many  instances 
the  Government  would  not  be  called  upon  to  make  good  its  guarantee. 

The  whole  proposition  resolves  itself  into  this:  Can  the  boats  be  made  to 
pay  ?  If  they  can  they  will  be  purchased ;  if  they  can  not  they  will  not  be 
purchased  or  chartered. 

I  have  not  gone  into  detail  as  I  do  not  believe  it  necessary.  If  the  plan 
is  feasible  it  would  be  necessary  for  experts  to  work  out  all  of  the  details 
surrounding  the  sale  and  operation  of  ships. 

[From   Emile   P.    Albrecht.   president,    Philadelphia   Bourse,    Philadelphia,    Pa.] 

In  my  judgment,  the  upbuilding  of  an  American  merchant  marine  to  ade- 
quately serve  the  needs  of  the  United  States  permanently  in  the  times  of 
peace,  when  conditions  become  more  nearly  normal  than  at  present,  can  only  be 
accomplished  by  the  adoption  of  a  policy  which  shall  have  behind  it  legislation 
commercially  successful  operation  in  competition  with  the  merchant  fleets  of 
other  nations  which  have  for  years  wTith  great  success  been  doing  the  carrying 
trade  of  the  world  in  over-seas  commerce. 

Unless  the  vessels  of  the  United  States  can  be  operated  as  cheaply  or  make 
as  good  a  return  to  their  owners  or  operators  as  do  the  vessels  under  other 
flags  it  needs  no  argument  to  prove  that  we  can  not  hope  to  have  a  merchant 
marine  under  the  United  States  llag  to  carry  our  foreign  commerce,  but  we 
will  have  to  be  content  to  go  back  to  the  same  or  a  worse  position,  if  it  be 
possible,  as  we  were  in  prior  to  the  war. 

American  initiative,  skill,  business  judgment  is  as  high  as  any  in  the  world, 
but  there  is  no  sentiment  in  business,  and  neither  our  people  nor  those  of 
other  lands  will  pay  1  cent  more  per  ton  for  carrying  their  goods  because  the 
vessel  Dies  the  United  States  flag. 

To  accomplish  the  desired  end  I  submit  the  following  suggestion — they  are 
not  original  perhaps  but  arrived  at  after  a  study  of  other  plans  from  an  un- 
biased standpoint,  having  no  monetary  interest  either  in  ships  or  in  importing 
or  exporting. 

1.  Government   ownership   and   operation   of  vessels  to  be  discontinued   as 
quickly  as  possible. 

2.  The  Shipping  Board  should  return  to  their  owners  as  quickly  as  possible 
the  vessels  requisitioned  from  American  owners,  including  any  seized  while 
building,  and  pay  for  them  a  proper  compensation  based  upon  their  earning 
power  during  the  period  they  were  out  of  their  owners'  control. 


90 

3.  The  Shipping  Board  should  sell  all  vessels  owned  by  it,  both  built  and 
under  construction,  which  are  suitable  for  foreign  trade,  to  private  owners  on 
the  following  terms : 

(a)  Sales  should  be  made  to  American  corporations,  firms,  or  individuals 
now  established  in  the  foreign  shipping  business,  and  to  such  others  as  appear 
to  the  Shipping  Board  to  be  responsible  and  qualified  to  operate  in  such  trade 
at  a  valuation  per  ton  to  be  determined  by  the  board,  not  exceeding,  however, 
the  lowest  cost  of  construction  of  similar  tonnage  in  standard  shipbuilding 
yards  of  our  principal  competitor  nations  at  that  time ;  usual  allowance  for 
depreciation  to  be  made  in  the  case  of  used  ships. 

Ships  in  course  of  construction  either  to  be  completed  by  the  board  or  by 
the  purchaser  so  as  to  permit  changes  to  be  made  if  desired,  the  price  to  be 
adjusted  on  the  basis  of  the  price  established  for  new  finished  vessels. 

(&)  Payment  to  be  made  25  per  cent  in  cash  balance  to  remain  on  mortgage 
at  the  then  prevailing  rate  of  interest  paid  by  the  Government.  The  mortgage 
to  run  for  a  period  of  15  to  20  years  and  to  provide  for  a  sinking  fund  to  pay 
off  the  mortgage  in  fixed  installments  but  with  the  privilege  to  the  purchaser  of 
paying  of  any  part  or  all  of  the  remainder  due  on  any1  interest  date.  Mort- 
gage also  to  provide  for  full  insurance  in  American  companies  with  the  obliga- 
tion on  the  part  of  the  Government  to  carry  its  own  insurance  on  the  vessel 
on  the  extent  of  the  balance  due  it  on  the  mortgage  if  the  entire  amount  can 
be  placed  by  the  owner  in  American  companies,  the  same  rate  of  premium  to 
be  paid  to  the  Government  on  such  insurance  as  is  paid  to  the  insurance  com- 
pany. 

4.  Any  vessels  suitable  for  foreign  trade  not  purchased  as  above  should  be 
distributed  for  management  and  operation,  as  far  as  possible,  to  those  who 
have  purchased  ships  in  proportion  to  their  purchases,  due  regard  being  given 
in  such  distribution  as  to  the  type  of  ships  suitable  to  the  trade  of  the  several 
purchasers. 

The  operators  of  such  ships  should  be  paid  a  fair  commission  for  their 
management  and  operation.  The  earnings  of  such  ships  should  be  pooled 
with  the  earnings  of  all  the  other  ships  owned  by  the  operator  and  the  same 
proportion  of  the  combined  earnings  should  be  paid  to  the  Government  as  the 
tonnage  of  operated  ships  bears  to  the  tonnage  of  the  ships  owned  by  the 
operator. 

The  Government  should  reserve  the  right  to  sell  such  ships  at  any  time  and 
to  withdraw  them  on  proper  notice  for  delivery  to  the  purchaser,  but  the 
operator  should  be  given  the  option  to  purchase  them  at  the  same  price  offered 
by  any  other  prospective  purchaser. 

5.  Legislation  should  be  speedily   enacted   so   as   to   constitute  a   mortgage 
on  a  ship  a  first  lien,  subject  only  to  liens  for  salvage,  general  average  and 
wages  of  crews. 

6.  Legislation  should  be  enacted   so  as  to   authorize   the  payment  by   the 
Government  to  the  owner  or  operator  of  ships  in  rhe  foreign  trade -under  the 
American  flag  such  sum  as  may  be  found  to  be  excess  cost,  if  any,  of  operation 
of  such  vessel  over  the  cost  of  operation  of  a  similar  vessel  in  the  same  trade 
under  the  flag  of  our  closest  competitor  in  the  same  trade. 

The  Shipping  Board  or  other  governmental  authority  should  be  given,  if  it 
does  not  now  possess,  the  authority  to  make  the  necessary  investigation  in 
order  to  determine  the  amount  of  such  excess,  also  to  enable  it  to  be  satisfied 
of  the  accuracy  of  the  sums  to  be  paid  as  the  proportionate  earnings  of  vessels 
operated  for  the  Government  under  clause  4. 

7.  The  establishment  of  regular  lines  of  passenger,  mail,  and  freight  steamers 
to  certain  countries  in  which  our  interests  are  considered  paramount  and  to 
our  dependencies  is  of  great  importance.     Such  vessels  must  at  least  equal  in 
speed,  comforts,  and  general  adaptability  to  these  routes  the  foreign  lines  now 
serving  those  countries  and  it  will  be  necessary  in  all  probability  to  run  such 
vessels  at  a  loss  while  the  trade  is  being  built  up. 

Therefore  legislation  should  be  enacted  which  will  encourage  and  provide  for 
the  building  and  profitable  operation  of  vessels  perfectly  suited  for  such  lines, 
either  or  both  by  building  subventions,  payments  for  carrying  mails,  or  in  some 
similar  form. 

8.  An  American  merchant  marine  to  be  of  value  as  an  auxiliary  to  the  Navy 
and  Army  and  to  build  up  a  strong  Naval  Reserve  force  should  be  officered  and 
manned  by  Americans. 

The  permission  at  present  granted  to  foreigners  to  officer  American  vessel* 
should  be  withdrawn  as  quickly  as  possible  and  it  should  be  made  mandatory 


91 

until  this  is  done  that  American  officers,  both  deck  and  engine  room,  should  be 
given  preference.  Legislation  should  be  enacted  making  it  mandatory  that  ar 
least  one-fourth  the  crew  in  each  department  shall  be  American  citizens,  said 
proportion  to  be  increased  as  more  men  become  available.  It  should  be  made 
mandatory  now  that  in  shipping  crews  for  American  vessels  Americans  be  given 
preference  if  available. 

9.  An   immediate  investigation  should  be  made,  as  the  Shipping  Board  is 
authorized  to  make,  or  a  conference  be  called  of  Government  officials,  steam- 
ship owners  and  operators,  officers  of  vessels,  and  representatives  of  seamen  to 
discuss  the  navigation  and  inspection  laws,  regulations,  and  practices  thereunder 
in  order  to  ascertain  fully  what,  if  any,  handicap  is  placed  on  American  ships 
by  those  laws,  regulations,  etc.,  so  that  they  may  be  corrected,  modified,  or 
abrogated  if  possible,  but  without  reducing  the  safety  of  the  vessel,  its  passen- 
gers or  crew,  or  sacrificing  their  health  or  comfort. 

10.  Legislation  should  be  enacted  to  permit  railroads  to  make  special  rates  on 
export  and  import  goods  between  inland  and  seaboard  points  for  shipments 
on  or  from  American  vessels. 

11.  Legislation  should  be  enacted  to  provide  for  Federal  incorporation  of 
steamship  companies  engaged  in  foreign  or  interstate  commerce. 

12.  As  far  as  possible  restrictions  and  limitations  upon  shipping  should  be 
removed,  so  that  there  shall  be  every  encouragement  given  to  enterprise  and 
initiative  in  the  operation  and  building  of  ships  on  the  part  of  those  who  have 
made  this  business  their  chief  aim  and  study,  who  have  not  and  will  not  hesi- 
tate to  still  further  invest  in  it  as  well  as  those  desirous  of  entering  the  field  as 
soon  as  they  can  see  under  national  policy  firmly  established  a   reasonable 
chance  for  the  commercially  successful  operation  of  a  merchant  marine  under 
the  American  flag. 

I  Extract  from  report  of  general  convention  committee  National  Foreign  Trade  Council, 
Chicago,  Apr.  24-26,   1919.] 

We  urge  the  earliest  possible  completion  of  the  Government  present  ship- 
building program. 

As  shipbuilding  is  one  of  the  greatest  essentials  for  the  prosperity  of  Ameri- 
can industry  the  Government  should  immediately  remove  all  restrictions  how 
placed  on  American  shipbuilding  and  permit  the  free  construction  of  vessels  for 
sale  to  foreign  interests. 

The  imperatively  necessary  revision  of  our  shipping,  navigation,  classifica- 
tion, and  measurement  laws  should  be  accomplished  without  delay  so  that 
American  vessels  can  be  placed  on  a  more  equitable  basis  of  competitive  oper- 
ating costs  in  foreign  trade. 

While  Government  ownership  and  reasonable  Government  control  of  Ameri- 
can shipping  must  continue  until  some  acceptable  plan  is  devised  for  the 
transfer  of  such  tonnage  to  private  ownership,  we  are  opposed  to  any  con- 
tinuance of  Government  operation  and  urge  that  consistent  with  recognized 
war  emergency  needs  these  Government  owned  vessels  be  allocated  to  suitable 
trades  and  trading  routes  for  operation  by  any  qualified  competent  American 
shipping  enterprise,  under  conditions  of  sale  or  charter  that  will  permit  of  their 
sending  the  American  Hag  to  any  port  of  the  world  on  a  fair  trading  competi- 
tive basis  with  that  of  any  other  maritime  nation. 

We  also  urge  the  Immediate  consideration  of  the  necessity  for  establishing 
coal  and  fuel  oil  depots  on  all  the  great  foreign  trading  routes  so  that  American 
shipping  shall  not  be  left  dependent  upon  foreign-owned  facilities  for  such 
vital  service. 

American  built  ships  for  American  foreign  trade — freed  from  all  burden- 
some restrictions — a  fair  world  field  and  no  favors  other  than  those  known 
to  be  absolutely  essential  to  the  reconstruction  and  highest  possible  develop- 
ment of  our  American  mercantile  marine— is  the  crying  need'  of  the  day,  if  the 
United  States  is  ever  to  win  its  rightful  place  in  international  commerce. 

[From  Eugene  P.  Thomas,  president,  United  States  Steel  Products  Co.,  New  York  City.] 

"  Pending  a  full  discussion,  which  will  undoubtedly  take  place  when  the  execu- 
tive committee  considers  this  matter  in  detail  and  formulates  an  opinion  which 
will  probably  be  circulated  among  the  members,  I  would  state  that  I  am  in  favor 
substantially  of  the  plan  as  proposed  by  Chairman  Hurley  of  the  United  States 
Shipping  Board,  subject  to  certain  modifications,  such  as  the  proposals  of  the 


92 

New  York  Chamber  of  Commerce  as  contained  in  the  report  on  American  mer- 
cantile marine,  dated  New  York,  December  26,  1918,  of  which  you  no  doubt  have 
copy  ;  also  subject  to  the  amendments  adopted  unanimously  by*  the  National  For- 
eign Trade  Convention, -recently  held  in  Chicago,  as  follows: 

"  We  urge  the  earliest  possible  completion  of  the  Government's  present  ship- 
building program. 

"As  shipbuilding  is  one  of  the  greatest  essentials  for  the  prosperity  of  Ameri- 
can industry,  the  Government  should  immediately  remove  all  restrictions  now 
placed  on  American  shipbuilding  and  permit  the  free  construction  of  vessels  for 
sale  to  foreign  interests. 

"  The  imperatively  necessary  revision  of  our  shipping,  navigation,  classifica- 
tion, and  measurement  laws  should  be  accomplished  without  delay  so  that  Ameri- 
can vessels  can  be  placed  on  a  more  equitable  basis  of  competitive  operating 
costs  in  foreign  trade. 

"  While  Government  ownership  and  reasonable  Government  control  of  Ameri- 
can shipping  must  continue  until  some  acceptable  plan  is  devised  for  the  transfer 
of  such  tonnage  to  private  ownership,  we  are  opposed  to  any  continuance  of 
Government  operation  and  urge  that  consistent  with  recognized  war  emergency 
needs  these  Government  owned  vessels  be  allocated  to  suitable  trades  and  trad- 
ing routes  for  operation  by  any  qualified,  competent  American  shipping  enter- 
prise, under  conditions  of  sale  or  charter  that  will  permit  of  their  sending  the 
American  flag  to  any  port  of  the  world  on  a  fair  trading  competitive  basis  with 
that  of  any  other  maritime  nation. 

"  We  also  urge  the  immediate  consideration  of  the  necessity  for  establishing 
coal  and  fuel  oil  depots  on  all  the  great  foreign  trading  routes  so  that  American 
shipping  shall  not  be  left  dependent  upon  foreign  owned  facilities  for  such  vital 
service." 

[From  C.  E.  Grunsky,  consulting  civil  engineer,  San  Francisco,  Calif.] 

1.  The  United  States  to  retain  the  ships  now  in  Government  ownership. 

2.  Operation  to  be  by  private  corporations  whose  subscribed  capital  stock  is 
to  be  not  less  than  the  cost  of  acquiring  tonnage  equivalent  to  that  which  each 
proposes  to  operate  at  current  prices  per  ton  in  the  world's  market.     (Cost  new 
only  to  be  considered.)     The  paid-in  capital  stock  of*  any  operating  concern  is 
to  be  at  least  25  per  cent  of  what  it  would  cost  to  acquire  the  equivalent  tonnage. 

3.  The  Government-owrned  ships  to  be  subject  to  recall  or  withdrawal  by  the 
United  States  upon  two  years'  notice  or  in  case  of  war  without  notice. 

4.  The  operating  concern  to  pay  to  the  United   States  an  annual  amount, 
representing  current   depreciation,   wherewith   to   amortize   the   legitimate  in- 
vestment, thereby  providing  a  fund  out  of  which  to  replace  the  ships  which  are 
discarded  from  time  to  time.    The  current  depreciation  will  be  charged  by  the 
operating  concern  to  operating  expense  and  is  to  be  computed  as  follows : 

Determine  the  legitimate  investment  of  capital  which  any  ship  represents 
by  deducting  accrued  depreciation  (straight-line  method),  if  the  vessel  is  no 
longer  new,  from  the  cost  of  acquiring  an  equivalent  tonnage  in  the  world's 
market.  Estimate  the  expectancy  of  each  ship  at  the  time  the  lease  is  entered 
into.  Then  amortize  the  investment  in  uniform  annual  amounts  obtained  by 
dividing  the  investment  as  above  computed  by  the  expectancy  expressed  in 
years. 

The  amount  thus  fixed  as  current  depreciation  should*  be  paid  annually  dur- 
ing the  period  of  each  ship's  usefulness,  even  though  the  ship  serves  beyond  its 
expected  term  of  usefulness.  The  payment  thereof  should  be  out  of  any  excess 
of  earnings  over  operating  expenses  other  than  interest  on  invested  capital  and 
depreciation,  and  should  become  due  annually  out  of  the  accumulation  of  any 
such  excess.  The  expectancy  of  each  ship  at  the  time  it  is  turned  over  to  an 
operating  concern  should  be  fixed  by  competent  experts. 

5.  When  United '  States  ships  are  operated  by  a  concern  which  also  operates 
other  ships,  the  concern's  entire  shipping  business  to  be  pooled  and  the  United 
States  tonnage  to  be  credited  with  that  proportion  of  net  earnings  which  this 
tonnage  bears  to  the  total  tonnage  operated  by  the  concern. 

6.  Not  more  than  20  ships  to  be  allotted  to  any  one  concern  within  any 
two-year  period  after  a  plan  of  procedure  is  adopted. 

7.  The   salaries  of  the  principal  officers  of  the  operating  concern,   charge- 
able to  operating  expense,  to  be  made  subject  to  the  approval  of  the  United 
States. 

8.  The  net  profits  (after  payment  to  the  United  States  of  current  deprecia- 
tion) to  be  divided  between  the  United  States  and  the  operating  concern  on  the 
basis  of  two-fifths  to  the  United  States  and  three-fifths  to  the  operating  concern. 


93 

9.  The  United  States  would,  under  this  plan,  recover  as  depreciation  or  as 
amortization   of  investment   somewhat   more   than   the  cost   of   replacing   the 
ships  as  they  go  out  of  use.     (The  assumption  is  made  that  the  ships  which  will 
come  under  consideration  may  be  all  regarded  as  practically  new.)     It  would 
require  no  increase  of  original  investment  to  replace  those  which  shall  have 
served  their  time,  consequently  the  United  States  would  be  placed  in  position 
to  maintain  ownership  of  the  present  amount  of  tonnage  for  all  time,  without 
recourse  to  funds  from  other  sources. 

10.  An  unequal  division  of  profits  in  favor  of  the  operating  concern  is  sug- 
gested because  a  somewhat  larger  risk  of  loss  will  be  assumed  by  it  than  by 
the  United  States.     The  United  States  in  case  of  business  failure  will  be  out 
the  current  depreciation  and  will  get  no  return  on  its  invested  capital,  but  by 
retaining  ownership  of  the  ship  the  United  States'  does  not  risk  the  loss  of 
any  capital  other  than  the  unpaid  amortization  increments. 

11.  The  establishment  of  regular  lines  of  transportation   to  foreign   coun- 
tries and  to  our  dependencies  may  require  government  subsidies.     To  any  ex- 
tent found  desirable,  the  profits  resulting  from  the  proposed  plan  of  operation 
can  be  held  available  for  such  subsidies.     The  balance  should  be  used  in  caring 
for  ships  not  inactive  use  and  for  such  other  purposes  as  Congress  may  deter- 
mine. 

Mr.  HURLEY.  T  would  like  to  hear  from  Mr.  Emil  Albreght, 
president  of  the  Philadelphia  Bourse,  Philadelphia,  Pa. 

Mr.  ALBREGHT.  Mr.  Chairman  and  gentlemen,  the  subject  of  the 
upbuilding  of  a  merchant  marine  has  had  the  attention  of  the 
Philadelphia  board  for  some  time  and  has  had  my  personal  at- 
tention not  only  as  an  individual  but  also  having  the  honor  of  being 
a  member  of  the  council  and  executive  committee  of  American 
Merchant  Marine  Association.  I  have  submitted  to  that  association 
my  views,  which  were  prepared  back  in  April  and  I  would  be  glad 
to'  refer  to  them  here,  and,  no  doubt  they  will  come  in  as  part  of  the 
record  which  the  secretary  of  that  association  will  submit  to  the 
Shipping  Board  to  go  into  the  records  of  these  proceedings. 

I  would  like  to  say,  first  of  all,  that  we  consider  that  it  is  entirely 
out  of  the  question  to  bother  much  about  the  cost  of  the  vessels 
which  are  recommended  to  be  sold  by  the  Shipping  Board,  as  com- 
pared with  the  price  that  may  be  obtained  for  them,  for  the  reason 
that  those  vessels  were  constructed  not  primarily  for  the  purpose  of 
building  up  a  merchant  marine,  but  as  material  of  war  which  served 
its  purpose  even  though  it  was  not  completely  built,  and  that  the 
moneys  which  will  be  received  from  those  vessels,  if  and  when  sold, 
will  be  just  that  much  money  saved  from  war  expenditures,  just  as 
though  we  could  turn  to  some  useful  commercial  account  all  of  the 
large  guns  which  were  started  and  not  completed  and  not  gotten  to 
the  other  side.  The  money  is  saved  so  far  as  commercial  purposes  is 
concerned.  Of  course  we  would  not  recommend  that  they  be  sold 
regardless  of  price,  but  we  do  not  think  that  too  much  stress  should 
be  laid  upon  whatever  difference  there  may  be  between  the  cost  of 
those  vessels  for  war  purposes  and  what  can  be  obtained  for  them 
at  world  market  prices  as  commercial  units  in  a  merchant  marine. 

We  first  of  all  recommend  that  Government  ownership  and  opera- 
don  of  vessels  be  discontinued  as  quickly  as  possible.  Secondly,  we 
believe  that  the  Shipping  Board  should  return  to  their  owners  as 
quickly  as  possible  the  vessels  requisitioned  from  American  owners, 
including  any  that  were  seized  while  building,  and  pay  for  them  to 
the  owners  a  proper  compensation  based  upon  what  those  vessels 
might  have  been  expected  to  earn  had  they  not  been  taken  out  of  the 
owner's  possession.  We  feel  that  the  Shipping  Board  should  sell  all 


94 

of  the  vessels  owned  by  it,  both  wood  and  steel  and  other  construc- 
tion, which  are  suitable  to  foreign  trade  to  private  owners  on  the  fol- 
lowing terms,  and  when  I  say  "  Sell  all  of  the  vessels,"  I  must  except 
from  that  probably  any  vessels  which  are  considered  absolutely  suit- 
able both  as  to  size,  speed  and  equipment  for  special  trade  route  to 
the  countries  in  which  we  feel  that  we  have  a  predominating  influence 
or  within  which  we  feel  we  ought  to  have  a  connection  because  that 
subject  may  have  to  be  treated  in  a  somewhat  different  manner.  But 
we  believe  those  sales  should  be  made  to  American  corporations, 
firms  or  individuals  that  are  now  established  in  the  foreign  shipping 
business  and  I  say  right  here  that  this  suggestion  is  not  mine  indi- 
vidually.  The  suggestions  that  I  am  making  are  really  compiled 
from  other  suggestions  that  have  been  made  by  various  individuals,, 
and  this  one  in  particular  I  think  was,  in  fact  I  know,  was  in  the 
plans  submitted  in  January  last  by  Mr.  Parker,  of  New  York ;  that 
they  should  be  sold  to  the  firms,  individuals,  and  corporations  now 
established  in  the  foreign  shipping  business,  and  to  such  others  as 
appear  to  the  Shipping  Board  to  be  responsible  and  qualified  to  oper- 
ate in  such  trade. 

That  differs  somewhat  in  language  from  the  suggestions  which 
have  been  made  by  the  chairman  of  the  hoard  as  to  selling  them  at 
the  world  market  price,  but  I  don't  think  that  there  is  much  difference 
in  effect  if  we  consider  the  cost  of  construction  at  the  present  time 
in  connection  with  the  time  of  delivery  of  the  vessels.  The  world's 
market  price  probably  would  be  the  best  terms  to  use  for  those  sales. 
As  to  the  payment  for  the  vessels  we  believe  that  the  terms  should  be 
liberal.  The  chairman  of  this  board  has  suggested  25  per  cent  in  cash 
and  10  years  for  paying  off  the  balance.  I  feel  that  that  time 
is  rather  short.  It  might  interfere  with  the  sale  of  some  of  the  ships, 
that  is  to  say,  parties  with  large,  but  still  not  too  large  a  capital 
might  with  a  longer  term  for  payment  be  enabled  to  purchase  more 
ships  than  would  be  likely  if  they  should  have  to  pay  off  the  mort- 
gage in  10  years  rather  than  15. 

The  chairman  and  I  have  had  considerable  correspondence  on  this 
subject  and  he  has  intimated  that  the  ships  might  not  last  for  15 
or  20  years  and  consequently  the  shorter  time  would  be  necessary. 
There  have  been,  I  know,  a  number  of  opinions  expressed  that  some 
of  the  ships  that  have  been  produced  would  not  last  that  time,  but  I 
did  not  want  to  give  expression  to  that  opinion  by  naming  that  in  my 
suggestion.  However,  from  a  business  standpoint,  naturally,  the 
mortgage  should  not  run  for  a  longer  period  ,of  time  than  property 
is  expected  to  last.  The  mortage  should  provide  for  full  insurance, 
naturally,  and  we  believe  that  that  insurance  should  be  carried  so  far 
as  possible  in  American  companies,  and  where  the  insurance  can  not 
be  so  carried  it  should  be  not  only  the  business  but  it  should  be  the 
duty  of  the  Government  to  carry  that  insurance  until  such  time  as 
the  American  insurance  companies  can  take  it  over.  We  dp  not  be- 
lieve in  the  Government  being  a  competitor  in  the  joint  business  any 
more  than  in  the  operation  of  the  ships  themselves.  The  sales  should 
all  be  made  subject  to  the  restriction  that  there  should  be  no  transfer 
to  foreign  flags  for  foreign  registry  without  the  expressed  consent  of 
the  Government. 

As  to  the  vessels  suitable  for  foreign  trade  that  might  not  be  pur- 
chased, we  believe  that  they  should  be  distributed  for  operation  so 


95 

far  as  possible  to  those  who  had  already  purchased  the  vessels.  The 
chairman  recently  wrote  me  that  he  did  not  think  that  plan  need  be 
considered  as  they  had  sufficient  offers  in  hand  at  good  prices  to  take 
all  of  the  ships,  but  if  that  situation  should  exist,  we  feel  that  there 
should  be  some  provision  made  for  taking  care  of  the  surplus  tonnage 
which  is  not  bought  by  the  operator,  and  the  plan  suggested  was  that 
they  should  be  distributed  to  those  who  had  purchased  ships  in  pro- 
portion to  their  purchases,  due  regard  being  given  in  the  distribution 
as  to  the  type  suitable  in  the  trade  of  the  several  purchasers,  and  the 
operators  of  those  ships  should  be  paid  a  fair  commission  for  their 
management  and  operations.  The  earnings  should  be  pooled  with 
the  earnings  of  all  ships  owned  by  those  parties  and  a  prorating  made 
of  the  earnings  of  those  ships  which  were  placed  with  those  who  had 
purchased  for  prosharing  with  the  Government.  The  chairman 
suggested  that  he  did  not  believe  that  the  steamship  owners  and  opera- 
tors would  agree  to  any  such  pooling  arrangement. 

I  have  taken  the  opportunity  of  calling  his  attention  to  the  fact 
that  this  particular  arrangement  was  in  the  plan  submitted  by  the 
American  Steamship  Association  of  the  Atlantic  coast.  I  think  that 
is  the  title. 

The  Government  should  reserve  the  right  to  sell  those  ships  which 
are  being  operated  at  any  time  on  proper  notice  for  delivery  but  the 
operator  should  be  given  the  option  to  purchase  them  at  the  same 
price  offered  by  any  other  prospective  purchaser.  Legislation  should 
be  speedily  enacted  so  as  to  constitute  a  mortgage  on  a  ship,  a  first 
lien  subject  only  to  salvage,  general  average  and  wages  of  the  crew. 
We  are  told  that  there  is  every  reason  to  believe  that  our  operators 
can  operate  the  ships  on  a  profitable  basis  without  any  other  assist- 
ance being  given.  Personally  I  hope  that  can  be  done  but  I  doubt  it, 
and  if  it  can  not  be  done  we  feel  that  there  should  be  legislation 
enacted  so  as  to  authorize  the  payment  by  the  Government  to  the 
owners  or  operator  of  the  ship  in  foreign  trade  under  the  American 
flag,  such  sum  as  should  be  found  to  be  the  excess  cost,  if  any,  of 
operation  of  such  vessels  over  the  cost  of  operation  of  a  similar  vessel 
in  the  same  trade  under  the  flag  of  our  closest  competitor  in  the  same 
trade.  If  the  ship  can  be  run  without  assistance,  well  and  good. 
There  is  nothing  to  be  paid.  But  if  we  want  to  have  an  American 
merchant  marine  manned  by  American  officers  and  seamen  for  the 
purpose,  first  of  all,  in  my  judgment,  as  an  auxiliary  to  the  Army  and 
Navy,  we  must  be  willing  to  pay  for  it  directly  or  indirectly,  and 
whether  it  can  be  called  a  subsidy,  subvention,  or  equalization  pay- 
ment makes  no  difference  whatever,  but  if  assistance  must  be  given  to 
sustain  that  American  merchant  marine  the  Government  must  be  pre- 
pared to  pay  it  just  exactly  the  same  as  the  profit  of  the  people  for 
the  benefit  of  the  people  of  the  Mississippi  Valley  is  subject  to  levy 
to  protect  that  territory  from  floods,  which  is  perfectly  proper.  It  is 
standing  the  excess  cost  over  the  receipt  for  parcels  post.  It  is  doing 
it  in  a  national  part  where  only  2  per  cent  of  the  population  receive 
any  benefit  from  it.  But  they  are  being  paid  for  out  of  the  pocket  of 
the  people,  and  I  can  not  see  why  there  should  be  any  difference  of 
opinion  raised  when  it  comes  to  the  upbuilding  of  a  merchant  marine 
which  nearly  everybody  says  we  should  and  must  have. 

As  to  the  establishment  of  regular  lines  of  passenger,  mail,  and 
freight  steamers  to  those  countries  in  which  our  interests  are  consid- 


96 

ered  paramount,  it  is  quite  likely  that  we  will  be  unable  to  find  pur- 
chasers who  will  of  their  owrn  volition  agree  to  run  such  lines  for  a 
specified  period  of  time  because  not  only  have  the  lines  got  to  be  run 
but  the  trade  has  got  to  be  obtained  from  those  who  now  possess  it 
and  those  foreign  people  are  rather  slow,  I  know,  from  my  own  expe- 
rience, to  make  changes  once  they  have  made  satisfactory  connections 
and  it  may,  therefore,  be  desirable  for  the  Government  tg  retain  the 
ownership  of  such  vessels  as  have  been  built  or  jnay  be  built  abso- 
lute!}' suited  for  those  trades  and  pay  a  commission  to  establish 
well-equipped  houses  for  running  those  vessels  until  such  time  as  the 
trade  is  profitable  and  then  have  them  taken  over.  At  first  I  thought 
otherwise.  I  have  become  convinced  from  the  suggestions  made  by 
people  representing  export  associations  that  their  view  in  the  matter 
is  correct  because  of  conditions  that  exist.  Not  because  wre  want  the 
Government  even  to  continue  owning  those  ships,  but  in  the  event 
that  it  is  impossible  to  secure  that  result  in  any  other  way,  then  it 
may  be  necessary  for  that  to  be  done.  One  point  on  which  I  want 
to  lay  particular  emphasis  is  the  necessity  for  having  the  ships  of  the 
American  merchant  marine  manned  by  American  officers  and  seamen, 
and  to  build  up  a  class  of  American  officers  and  seamen  will  take 
time,  but  at  the  present  time  there  is  discrimination  against  them. 

At  Philadelphia  the  .chief  engineer  of  the  building  which  I  have 
to  look  after  is  in  charge  of  the  sea  service  bureau,  and  was  in  charge 
of  the  recruiting  service  until  it  was,  I  think,  rather  inadvisably  put 
into  hands  of  the  Riker-Hegeman  drug  stores.  I  know  from  what 
he  tells  me  almost  daily  the  difficulties  he  has  had  in  placing  natural 
born  Americans  who  have  gone  to  the  engineering  and  navigation 
schools  on  their  ships  to  get  their  six  months'  sea  training  before 
they  can  get  their  tickets. 

EXHIBIT  B. 

COMMENT  UPON  THE  PLAN  FOB  THE  OPERATION  OF  THE  NEW  AMERICAN  MERCHANT 
MARINE  AS  PROPOSED  BY  EDWARD  N.  HURLEY,  CHAIRMAN  OF  THE  UNITED  .STATES 
SHIPPING  BOARD. 

[By  Bmil  P.  Albrecht,  president  of  the  Philadelphia  Bourse,  Apr.  7,  1919.] 

I  will  not  attempt  here  to  do  more  than  comment  upon  Mr.  Hurley's  plan — 
my  own  suggestions,  which  are  not  perhaps  original  but  a  compilation  of  ideas, 
I  have  given  in  another  paper. 

I  have  carefully  studied  the  plan  proposed  by  Mr.  Hurley  and  the  general 
principles  stated  by  him  I  can  heartily  indorse,  but  with  his  suggestions  as  to 
some  of  the  details  I  am  unable  to  agree,  not  because  the  ideas  are  not  good 
but  because  they  do  not  appeal  to  me  as  capable  of  being  worked  out  practi- 
cally. 

I  agree  heartily  with  his  statement  in  favor  of  private  ownership  and  opera- 
tion and  his  expression  "  the  formalities  necessarily  surrounding  Government 
operations  are  not  suited  to  the  successful  conduct  of  a  shipping  venture,  re- 
quiring quick  decision,  sudden  reversals  of  policy,  and  the  assuming  of  great 
hazards.  The  successful  shipping  man  in  an  emergency  consults  no  book  of 
rules.  He  consults  only  his  wits  " ;  also  with  his  remarks  as  to  return  cargoes, 
"  Such  operations  require  a  degree  of  special  negotiation  and  freedom  from 
control  to  which  Government  operations  are  entirely  unsuited.  They  can  not 
be  standardized.  No  rule  can  be  laid  down  which  a  Government  employee 
could  follow,  for  the  conditions  are  constantly  shifting,  and  in  this  tramp  busi- 
ness the  competition  of  the  world  must  be  met,  facility  with  facility,  rate  with 
rate." 

I  agree  with  his  suggestion  that  "  the  ships  should  be  sold  at  a  price  which 
fairly  reflects  the  current  world  market  for  similar  tonnage,"  but  I  think  his 


97 

terms  are  hardly  fair.  The  cash  basis  of  25  per  cent  is  all  right,  but  the  bal- 
ance should  be 'extended  over  a  period  of  15  to  20. years  instead  of  only  10 
years,  and  it  should  be  permitted  the  purchaser  to  pay  off  the  mortgage  when- 
ever he  can  do  so. 

I  can  not  see  any  reason  for  compelling  all  purchasers  to  buy  on  same  terms 
and  not  permit  early  payment  of  the  mortgage  if  possible.  He  says  if  the  ivi'i- 
ciple  were  deviated  from  "  we  would  place  the  big,  powerful,  and  exne'-ioncetl 
operator  in  a  position  of  such  great  advantages  that  new  blood  -md  brains 
hardly  would  dare  venture  into  the  business."  I  should  suppose  experienced 
people  are  what  is  needed — he  says  so  himself  in  his  argument  in  favor  of 
private  ownership.  In  my  judgment  we  need  not  worry  about  that  feature. 
The  inexperienced  man  will  not  succeed  merely  because  the  big  experienced  one 
is  not  permitted  to  pay  off  his  mortgage. 

Mr.  Hurley's  suggestion  of  a  "  Merchant  marine  development  fund  "  is  perhaps 
good  in  theory,  but  I  can  not  see  that  it  will  wrork  out  in  practice.  An  interest 
charge  of  5  per  cent  on  the  mortgage  might  be  all  right  at  the  present  time,  but 
there  is  not  a  difference  of  1  per  cent  between  this  and  what  the  Government 
is  now  paying  on  its  loans. 

Furthermore,  it  is  questioned  by  those  familiar  with  the  marine-insurance 
husiness  that  the  Government  can  carry  the  insurance  on  its  equity  in  the  ships 
at  1  per  cent  less  than  the  regular  companies.  The  Government's  expenses  are 
as  great  or  greater  to  carry  on  this  work  than  are  those  of  the  companies,  and 
if  the  formation  of  new  insurance  companies  is  to  be  encouraged,  the  Govern- 
ment ought  not  to  take  away  any  business  that  they  might  carry.  It  would  be 
all  right  for  the  Government  to  carry  (and  it  should  do  so)  any  that  they  could 
not,  but  it  ought  not  to  take  the  business  away  from  them. 

I  feel  that  the  development  fund  would  not  amount  to  anything  like  the 
figures  given  by  Mr.  Hurley,  nor  would  the  use  of  the  fund  in  the  way  he  sug- 
gests really  be  of  permanent  benefit  to  the  lines  assisted,  as  the  assistance  would 
really  be  only  a  loan  to  be  repaid  just  as  soon  as  the  lines  began  to  be  profitable. 

While  provision  should  be  made  for  Federal  incorporation  of  steamship  com- 
panies engaged  in  foreign  and  interstate  commerce,  I  can  not  see  the  necessity 
for  forming  a  new  corporation  by  each  purchaser.  This  would  seem  to  shut  out 
all  the  companies  as  at  present  organized,  because  Mr.  Hurley's  plan  limits  the 
stock  to  be  issued  to  the  actual  money  value  paid  in  on  the  vessel  property. 

Furthermore,  such  limited  capitalization  would  leave  the  companies  without 
working  capital,  and  with  the  ships  mortgaged  to  the  Government  I  can  not  see 
what  they  would  have  as  a  basis  for  other  financial  assistance,  of  which  he 
speaks,  as  likely  to  be  accorded  them. 

There  could  be,  I  think,  no  objection  to  a  minority  interest  being  held  by 
aliens,  provided  officers  and  directors  were  citizens. 

The  idea  of  a  Government  director  in  each  corporation  does  not  appeal  to  me 
as  a  practical  one.  With  1,891  ships  to  sell,  and  an  average  of  10  ships  to  a 
corporation,  at  an  average  price  of  $700,000  each,  it  would  mean  189  corpora- 
tions, with  an  average  cash  capital  of  25  per  cent  of  $7,000,000,  or  $1,750,000. 

On  the  board  of  each  of  these  would  be  a  Government  director — 189  of  them, 
lo  serve  without  compensation,  except  fees  for  attending  meetings — and  his 
thought  is  because  they  draw  no  salary  it  "  automatically  insures  that  no  great 
number  of  them  will  be  men  whose  interests  are  centered  in  the  steamship 
business."  I  confess  I  can  not  follow  his  reasoning. 

He  also  says  that  the  provision  that  "the  Government  shall  name  them  insures 
that  they  will  be  men  of  standing,  sympathetic  with  American  interests,  and 
alive  to  the  public  service  character  of  the  steamship  business."  I  can  not  see 
that  this  necessarily  follows. 

These  directors,  without  expenses  being  paid  (at  least  that  is  not  suggested 
nor  the  size  of  the  fee  named),  beside  attending  the  meetings  of  the  corpora- 
tion board,  are  expected  to  attend  quarterly  meetings  at  Washington,  accom- 
panied by  members  of  the  operating  companies'  boards — form  a  permanent  or- 
ganization and  establish  permanent  offices.  They  are  to  handle,  through  com- 
mittees, the  questions  of  trade  routes,  freight  rates,  etc.,  and  yet  Mr.  Hurley 
says  also  that  the  ships  should  "  be  sold  to  and  operated  by  the  purchasers 
under  no  other  restrictions  than  the  terms  of  the  bill  of  sale  and  the  fixation  of 
maximum  freight  rates." 

It  seems  to  me  that  the  thing  to  do  is  to  remove  every  restriction  possible 
and  let  the  purchasers  go  ahead  and  hustle  for  their  business.  No  attempt 

12103^ 


98 

should  be  made  to  dictate  to  them  as  to  where  they  shall  send  their  ships  or  fix 
rates,  The  demand  for  tonnage  will  satisfactorily  take  care  of  both  these 
points. 

Of  course,  for  the  establishment  of  regular  lines  of  passenger,  mail,  and 
freight  carriers  to  countries  in  which  we  have  what  we  consider  a  paramount 
interest,  and  to  our  dependencies,  special  arrangements  must  be  made,  but  it 
is  doubtful  whether  any  of  the  ships  now  built  or  building  will  be  suitable  for 
these  trades,  and  if  not,  inducement  must  be  offered  for  the  construction  and 
operation  of  vessels  in  every  way  equal  to  or  surpassing  the  foreign  vessels 
now  in  that  trade,  and  even  then  the  business  has  to  be  coaxed  away  from  the 
old  line.  That  however  is  a  separate  problem  and  can  well  be  handled  inde- 
pendently of  the  other  one. 

The  proposed  merchant  marine  development  fund,  as  I  said  before,  may  be 
good  in  theory,  but  I  do  not  think  it  will  work  out  practically — (1)  because  I 
doubt  it  will  reach  any  such  figure  as  given;  (2)  because  the  assistance  pro- 
posed is  merely  a  loan  and  piles  up  debt  in  addition  to  the  mortgage  against  the 
ship  or  the  corporation;  (3)  because  the  method  of  handling  the  fund  through 
the  Associated  Government  Directors  of  Steamship  Corporations,  an  unwieldy 
body  of  men  selected  because  of  their  having  no  interests  in  steamships,  would 
mean  in  all  probability  a  series  of  disastrous  and  expensive  experiments  and  a 
continual  interference  with  the  management  of  the  ships  by  their  owners  from 
men  without  financial  interest  in  them  and  therefore  without  incentive  to 
make  them  successful. 

Let  the  purchasers  run  their  ships  where  and  as  they  please  (except  ships  on 
special  routes  above  referred  to)  and  if  they  can  be  operated  on  an  equal 
basis  with  their  foreign  competitors  they  will  succeed.  If  however  the  cost 
of  operation  of  ships  under  the  American  flag  is  higher  than  the  cost  of  opera- 
tion of  similar  ships  in  the  same  trade  under  foreign  flags,  it  requires  no  argu- 
ment to  prove  that  either  one  of  two  things  must  be  done — (1)  have  the  Govern- 
ment pay  the  owner  or  operator  the  amount  of  that  excess  cost  of  operation,  if 
there  be  any,  which  can  be  readily  ascertained  by  the  Shipping  Board  or  some 
other  governmental  agency,  and  thus  start  the  American  ship  and  the  foreign 
ship  in  the  race  from  the  same  line  and  carrying  the  same  load,  or  (2)  have  no 
merchant  marine  under  our  flag,  and  go  back  to  the  same  position  (or  worse,  if 
possible)  that  we  were  in  before  the  war  began. 

The  foregoing  comments  refer  only  to  Mr.  Hurley's  suggestions — but  if  his 
plan  is  to  be  considered  as  a  complete  one,  then  it  is  necessary  to  call  attention 
to  several  features  as  to  which  he  makes  no  reference  whatever  and  which  are 
of  great  importance  in  the  successful  operation  of  our  merchant  marine — such 
as  disposition  of  the  wooden  ships  and  any  steel  ships  not  sold,  provision  for 
manning  the  ship  with  American  officers  and  crew,  and  the  revision  of  our 
navigation  and  inspection  lawrs  and  the  regulations  under  them  so  that  all  handi- 
caps, if  any,  exist  as  is  continually  asserted  by  owners  of  American  vessels, 
shall  be  removed. 

EXHIBIT  C. 

SUGGESTIONS  FOR  A  GOVERNMENTAL  POLICY  HAVING  FOR  ITS  OBJECT  THK  PERMA- 
NENT UPBUILDING  AND  SUCCESSFUL  OPERATION  OF  AN  AMERICAN  MERCHANT 
MARINE. 

[Submitted  to  the  National  Merchant  Marine  Association,  by  Emil  P.  Albrecht,  president 
of  the  Philadelphia  Bourse,  April  7,   1919.] 

In  formulating  a  policy  for  the  upbuilding,  maintenance,  and  operation  of  an 
American  merchant  marine,  using  as  a  nucleus  thereof  the  vessels  now  con- 
trolled by  the  United  States  Shipping  Board,  it  must  be  kept  in  mind  that  the 
Shipping  Board,  under  the  act  of  September  7,  1916,  which  created  it,  has  done 
practically  nothing  toward  the  creation  of  an  American  ma  reliant  marine,  but 
its  work  and  operations  were  carried  on  under  the  instructions  and  directions 
of  the  President  of  the  United  States  and  with  moneys  appropriated  to  be 
used  by  him  for  the  purpose  of  securing  the  tonnage  necessary  in  the  prosecu- 
tion of  the  wrar  to  transport  troops,  munitions,  and  supplies. 

All  the  vessels  requisitioned  from  private  owners,  built  and  building,  seized 
from  enemy  nations, .  commandeered  from  neutrals,  or  built  under  the  direc- 
tion of  the' board  in  the  new  yards  hastily  constructed  were  for  this  One  pur- 
pose and  they  served  that  purpose  well. 


99 

The  question  of  cost  was  of  secondary  consideration.  What  was  needed 
was  shins,  more  ships,  ships  of  any  kind  that  could  carry  the  needed  supplies  of 
inoii  and  munitions  on  the  other  side  of  the  world.  The  moneys  spent  were  for 
war  purposes  alone.  The  result  of  that  expenditure  was  material  of  war,  and 
had  that  material  been  absolutely  used  up,  with  nothing  remaining,  the 
expenditure  would  have  been  fully  justified  so  long  as  it  assisted,  as  it  un- 
doubtedly did,  in  shortening  the  duration  of  the  war. 

If  .-is  has  been  stated  the  war  was  costing  the  United  States  $40,000,000  a 
day,  a  prolongation  of  the  conflict  for  100  days  more  would  have  meant  the 
expenditure  of  $4,000,000,000.  By  spending  that  sum  in  the  creation  of  ship- 
yards, in  the  building  of  ships  and  their  operation  (even  if  there  were  no 
salvage)  we  are  no  poorer — because  without  the  shipping  program  the  war 
would  certainly  have  lasted  100  days  longer — and  \ve  would  have  had  losses  of 
life  far  greater  than  we  did  suffer  for  which  no  money  could  adequately  pay. 

Therefore,  I  contend  that  in  considering  the  disposition  which  is  to  be  made 
of  the  vessels  belonging  to  the  United  States  and  controlled  by  the  Shipping 
Board,  vessels  constructed  for  war  purposes,  they  should  be  looked  upon  as 
salv;.ge  from  the  scrap  pile  of  unused  war  material  and  money  obtained  from 
them  by  their  sale,  at  whatever  price  they  may  bring,  as  so  much  money  saved 
and  not  talk  about  a  loss  because  they  cost  more  as  a  .war  production  than 
they  bring  for  peace  uses. 

In  my  judgment,  the  upbuilding  of  an  American  merchant  marine  to 
adequately  serve  the  needs  of  the  United  States  permanently,  in  times  of 
peace  when  conditions  become  more  nearly  normal  than  at  present,  can  only 
be  accomplished  by  the  adoption  of  a  policy  which  shall  have  behind  it  legisla- 
tion on  the  par*-  of  the  Federal  Congress  which  will  insure  its  commercially 
successful  operation  in  competition  with  the  merchant  fleets  of  other  nations 
which  have  for  years  with  great  success  been  doing  the  carrying  trade  of  the 
world  in  overseas  commerce. 

Unless  the  vessels  of  the  United  States  can  be  operated  as  cheaply  or  make  as 
good  a  return  to  their  owners  or  operators  as  do  the  vessels  under  other  flags 
it  needs  no  argument  to  prove  that  we  can  not  hope  to  have  a  merchant  marine 
under^the  United  States  flag  to  carry  our  foreign  commerce,  but  we  will  have  to 
be  content  to  go  back  to  the  same  or  a  worse  position,  if  it  be  possible,  as  we 
were  in  prior  to  the  war. 

American  initiative,  skill,  business  judgment,  is  as  high  as  any  in  the  world, 
but  there  is  no  sentiment  in  business  and  neither  our  own  people  nor  those  of 
other  Innds  will  pay  one  cent  more  per  ton  for  carrying  their  goods  because  the 
vessel  flies  the  United  States  flag. 

To  accomplish  the  desired  end  I  submit  the  following  suggestions.  They  are 
not  original,  perhaps,  but  arrived  at  after  a  study  of  other  plans  from  an  un- 
biased standpoint  having  no  monetary  interest  either  in  ships  or  in  importing 
or  exporting. 

1.  Government  ownership   and   operation   of   vessels   to  ,be   discontinued   as 
quickly  as  possible. 

2.  The  Shipping  Board  should  return  to  their  owners  as  quickly  as  possible 
the  vessels  requisitioned  from  American  owners,   including  any  seized   while 
building,  and  pay  for  them  a  proper  compensation  based  upon  their  earning 
power  during  the  period  they  were  out  of  their  owners'  control. 

3.  The  Shipping  Board  should  sell  all  vessels  owned  by  it,  both  built  and  under 
construction,  which  are  suitable  for  foreign  trade,  to  private  owners  on  the  fol- 
lowing terms : 

(a)  Sales  should  be  made  to  American  corporations,  firms,  or  individuals 
now  established  in  the  foreign  shipping  business  and  to  such  others  as  appear 
to  the  Shipping  Board  to  be  responsible  and  qualified  to  operate  in  such  trade  at 
a  valuation  per  ton  to  be  determined  by  the  board,  not  exceeding,  however,  the 
lowest  cost  of  construction  of  similar  tonnage  in  standard  shipbuilding  yards  of 
our  principal  competitor  nations  at  that  time ;  usual  allowance  for  depreciation 
to  be  made  in  the  case  of  used  ships.  Ships  in  course  of  construction  either  to 
be  completed  by  the  board  or  by  the  purchaser  so  as  to  permit  changes  to  be 
made  if  desired,  the  price  to  be  adjusted  on  the  basis  of  the  price  established 
for  new  finished  vessels. 

(/>)  Payment  to  be  made  25  per  cent  in  cash,  balance  to  remain  on  mortgage 
at  the  then  prevailing  rate  of  interest  paid  by  the  Government.  The  mortgage 
to  run  for  a  period  of  15  to  20  years  and  to  provide  for  a  sinking  fund  to  pay  off 
the  mortgage  in  fixed  installments,  but  with  the  privilege  to  the  purchaser  of  pay- 


100 

ing  off  any  part  or  all  of  the  remainder  due  on  any  interest  date.  Mortgage 
also  to  provide  for  full  insurance  in  American  companies  with  the  obligation 
on  the  part  of  the  Government  to  carry  its  own  insurance  on  the  vessel  to  the 
extent  of  the  balance  due  it  on  the  mortgage  if  the  entire  amount  can  be  placed 
by  the  owner  in  American  companies,  the  same  rate  of  premium  to  be  paid  to 
the  Government  on  such  insurance  as  is  paid  to  the  insurance  company. 

(c)  The  sales  should  all  be  made  subject  to  the  restriction  that  no  transfer 
to  foreign  owners  or  to  foreign  registry  be  permitted  without  express  consent 
of  the  Government. 

4.  Any  vessels  suitable  for  foreign  trade  not  purchased  as  above  should  be 
distributed  for  management  and  operation,  as  far  as  practicable,  to  those  who 
have  purchased  ships  in  proportion  to  their  purchases,  due  regard  being  given 
in  such  distribution  as  to  the  type  of  ships  suitable  to  the  trade  of  the  several 
purchasers. 

The  operators  of  such  ships  should  be  paid  a  fair  commission  for  their  manage- 
ment and  operation.  The  earnings  of  such  ships  should  be  pooled  wTith  the 
earnings  of  all  the  other  ships  owned  by  the  operator  and  the  same  proportion 
of  the  combined  earnings  should  be  paid  to  the  Government  as  the  tonnage  of 
operated  ships  bears  to  the  tonnage  of  the  ships  owned  by  the  operator. 

The  Government  should  reserve  the  right  to  sell  such  ships  at  any  time  and  to 
withdraw  them  on  proper  notice  for  delivery  to  the  purchaser,  but  the  operator 
should  be  given  the  option  to  purchase  them  at  the  same  price  offered  by  any 
other  prospective  purchaser. 

5.  Legislation  should  be  speedily  enacted  so  as  to  constitute  a  mortgage  on  a 
ship  a  tirst  lien  subject  only  to  liens  for  salvage,  general  average,  and  the  wages 
of  crew. 

6.  Legislation  should  be  enacted  so  as  to  authorize  the  payment  by  the  Govern- 
ment to  the  owner  or  operator  of  ships  in  the  foreign  trade  under  the  American 
flag  such  sum  as  may  be  found  to  be  excess  cost  (if  any)  of  operation  of  such 
vessel  over  the  cost  of  operation  of  a  similar  vessel  in  the  same  trade  under  the 
flag  of  our  closest  competitor  in  the  same  trade. 

The  Shipping  Board  or  other  governmental  authority  should  be  given,  if  it 
does  not  now  possess,  the  authority  to  make  the  necessary  investigation  in  order 
to  determine  the  amount  of  such  excess ;  also  to  enable  it  to  be  satisfied  of  the 
accuracy  of  the  sums  to  be  paid  as  the  proportionate  earnings  of  vessels  operated 
for  the  Government  under  clause  4. 

7.  The  establishment  of  regular  lines  of  passenger,  mail,  and  freight  steamers 
to  certain  countries  in  which  our  interests  are  considered  paramount  and  to  our 
dependencies  is  of  great  importance.     Such  vessels  must  at  least  equal  in  speed, 
comforts,  and  general  adaptability  to  these  routes  the  foreign  lines  now  serving 
those  countries,  and  it  will  be  necessary  in  all  probability  to  run  such  vessels 
at  a  loss  while  the  trade  is  being  built  up. 

Therefore,*  legislation  should  be  enacted  which  will  encourage  and  provide  for 
the  building  and  profitable  operation  of  vessels  perfectly  suited  for  such  lines, 
either  or  both  by  building  subventions,  payments  for  carrying  mails,  or  in  some 
similar  form. 

8.  An  American  merchant  marine  to  be  of  value  as  an  auxiliary  to  the  Navy 
and  Army  and  to  build  up  a  strong  Naval  Reserve  Force  should  be  officered  and 
manned  by  Americans. 

The  permission  at  presented  granted  to  foreigners  to  officer  American  vessels 
should  be  withdrawn  as  quickly  as  possible,  and  it  should  be  made  mandatory 
until  this  is  done  that  American  officers,  both  deck  and  engine-room,  should  be 
given  preference.  Legislation  should  be  enacted  making  it  mandatory  that  at 
least  one-fourth  the  crew  in  each  department  shall  be  American  citizens,  said 
proportion  to  be  increased  as  more  men  become  available.  It  should  be  made 
mandatory  now  that  in  shipping  crews  for  American  vessels  Americans  be  given 
preference,  if  available. 

9.  An  immediate  investigation  should  be  made,  as  the  Shipping  Board  is  au- 
thorized to  make,  or  a  conference  be  called  of  Government  officials,  steamship 
owners  and  operators,  officers  of  vessels  and  representatives  of  seamen  to  dis- 
cuss the  navigation  and  inspection  laws,  regulations  and  practices  thereunder, 
in  order  to  ascertain  fully  what,  if  any,  handicap  is  placed  on  American  ships 
by  those  laws,  regulations,  etc.,  so  that  they  may  be  corrected,  modified  or  abro- 
gated if  possible,  but  without  reducing  the  safety  of  the  vessel,  its  passengers 
or  crew  or  sacrificing  their  health  or  comfort. 


101 

10.  Legislation  .should  be  enacted  to  permit  railroads  to  make  special  rates 
on  export  and  import  goods  between  inland  and  seaboard  points  for  shipments 
on  or  from  American  vessels. 

11.  Legislation   should   be  enacted   to   provide   for   Federal    incorporation    of 
steamship  companies  engaged  in  foreign  or  interstate  commerce. 

12.  As  far  as  possible  restrictions  and  limitations  upon  shipping  should   be 
removed,  so  that  there  shall  be  every  encouragement  given  to  enterprise  and 
initiative   in   the  operation   and  building  of   ships   on    the   part   of  those   who 
have  made  this  business  their  chief  aim  and  study,  who  have  not  and  will  not 
hesitate  to  still  further  invest  in  it,  as  well  as  those  desirous  of  entering  the 
Held  as  soon  as  they  can  see  under  national  policy  firmly  established  a  reason- 
able chance  for  the  commercially  successful  operation  of  a  merchant  marine 
under  the  American  flag. 

Mr.  HURLEY.  Mr.  F.  E.  Robertson,  State  College  of  Agriculture, 
Ithaca,  N.  Y. 

Mr.  KOBERTSON.  Mr.  Chairman,  I  have  nothing  to  say.  I  just  came 
in  to  listen  to  what  is  going  on. 

Mr.  HURLEY.  P.  A.  S.  Franklin,  of  the  International  Mercantile 
Marine,  New  York  City. 

Mr.  FRANKLIN.  Mr.  Raymond  said,  "The  American  Steamship 
Owners'  Association."  [Laughter.] 

Gentlemen,  I  have  not  had  an  opportunity  of  preparing  any  docu- 
ments to  submit  here  in  the  way  of  a  speech  or  statement,  and  there- 
fore my  remarks  will  be  very  informal.  The  United  States  has  for 
a  number  of  years  talked  about  the  development  of  an  American 
merchant  marine,  but  prior  to  the  war  nothing  tangible  had  been 
done  in  that  direction.  The  developments  during  the  war  were  such 
as  to  demonstrate  the  necessity  for  an  American  merchant  marine, 
under  the  American  flag,  controlled  absolutely  by  Americans.  Dur- 
ing the  early  days  of  the  war  shippers,  passengers,  mail,  and  freight 
transportation  facilities  across  the  high  seas  were  very  much  inter- 
fered with,  and  at  times  it  was  impossible  to  cross  to  the  other  side, 
clearly  demonstrating  the  importance  of  a  country  of  such  a  large 
production  as  this,  and  particularly  with  such  a  tremendous  export 
business  to  all  ports  of  the  world,  having  its  own  delivery  system,  in 
order  to  enable  its  citizens  to  handle  their  own  transportation  needs 
before  they  got  into  the  war  themselves  and  independently  of  any 
of  the  belligerents. 

Now,  the  United  States  very  properly  adopted  a  policy  of  active 
production  of  wooden,  steel,  and  every  other  kind  of  craft  that  could 
be  rapidly  produced,  and  if  these  wooden  and  steel  steamers  had  not 
been  proceeded  with  in  the  way  they  were  by  the  United  States  Ship- 
ping Board  Emergency  Fleet  Corporation,  and  we  had  found  our- 
selves with  the  troops  in  France  and  no  way  of  getting  our  products 
over  there,  somebody  would  have  been  criticized.  Therefore,  I  thor- 
oughly indorse  the  program  of  the  United  States  Shipping  Board 
Emergency  Fleet  Corporation. 

I  feel  quite  strongly  that  the  wooden  steamers  are  not  suitable  for 
foreign  business  and  should  be  disposed  of  as  soon  as  possible.  I.  also 
think  that  the  steamers  under  6,000  tons  should,  to  a  very  large  ex- 
tent, be  disposed  of  to  foreigners  as  they,  also,  are  not  suitable  for 
our  foreign  trade  as  we  look  upon  it.  As  to  the  others,  I  think  the 
building  program  should  be  continued.  The  program  would  do  the 
United  States  credit.  If  the  United  States,  prior  to  the  war,  had 
decided  upon  a  building  program  for  the  merchant  marine  of 


102 

10,000,000  tons  in  ten  years,  I  hardly  think  that  the  most  sanguine 
person  would  have  believed  we  could  have  accomplished  it  by  1920. 
I  think  we  should  deal  with  the  ships  as  a  whole  from  that  point 
of  view. 

It  isn't  a  question  only  of  manufacturing  ships — it  is  a  question  of 
building  up  individual  corporations,  banking  facilities,  sales  depart- 
ments in  foreign  countries,  and  other  things  necessary  to  enable  the 
traffic  to  be  handled  properly.  I  think  it  is  exceedingly  important, 
and  we  have  given  this  matter  a  great  deal  of  consideration  and  feel 
that  the  steel  steamers  should  be  sold  to  private  corporations  and 
private  individuals  and  should  be  operated  absolutely  as  private 
property,  and  not  by  the  Government  in  any  way,  shape,  or  form. 
We  also  feel  very  strongly  that  a  very  comprehensive  policy  should 
be  adopted  by  the  Shipping  Board  and  by  the  Government  for  the 
prospective  buyers  of  these  steamers,  so  that  they  may  know  what  the 
future  situation  is  going  to  be,  and  not  feel  that  two  years  from  now 
we  are  going  to  have  a  different  policy,  and  in  that  time  having  Gov- 
ernment-owned ships  competing  with  the  privately  owned  ships. 
Without  such  policy  it  would  be  impossible  to  get  people  to  put  their 
money  in  the  enterprise.  They  feel  that  if  they  would  wait  two 
years  they  will  have  a  better  opportunity  than  to-day. 

Again,  we  believe  that  it  is  essential  that  shipping  houses  should  be 
built  up  in  every  port  of  this  great  country.  Each  port,  each  section 
of  the  country — the  Pacific  coast,  the  Atlantic  coast,  New  Orleans, 
Galveston,  San  Francisco,  Seattle,  and  every  other  place — should  do 
their  utmost  to  create  shipping  companies  and  corporations  and  build 
them  up,  and  it  is  only  by  getting  the  public  money  into  these  enter- 
prises, and  get  the  people  of  the  section  and  the  ports  themselves 
interested  all  over  the  United  States,  that  you  are  going  to  be  able 
to  absorb  these  ships  that  have  been  built  by  the  Government  during 
the  period  of  the  war. 

I  am  not  an  advocate  of  a  New  Orleans  shipping  house  doing  New 
Orleans  business  only.  They  should  be  equipped  to  handle  business 
from  all  ports  from  Portland,  Me.,  to  New  Orleans  and  from  any 
other  place  in  order  to  take  their  proper  place  in  the  shipping  world. 
It  is  not  necessary  to  confine  this  to  any  one  district.  It  ought  to  be 
built  up  in  every  direction.  Now,  as  far  as  the  monopoly  of  the  situa- 
tion is  concerned,  I  do  not  see  the  slightest  possibility  of  a  monopoly. 
Large  and  small  corporations  may  be  formed  and  some  may  be  more 
successful  than  ethers.  But  you  are  going  into  competition  with  the 
world.  It  is  the  shipowner  of  the  world  that  you  are  going  to  deal 
with,  therefore  the  more  American  people  who  go  into  the  shipping 
business,  the  more  firms  that  are  established  in  the  various  ports, 
the  better  it  will  be  for  exports  from  every  section  and  better  for  the 
American  shipping  business  as  a  whole.  If  the  hand  of  the  Govern- 
ment is  to  be  with  the  people,  and  the  hand  of  the  Government  is 
going  to  be  with  them,  this  country  can  develop  the  ship  industry 
just  as  well  as  it  has  developed  the  steel  industry.  There  is  no  reason 
in  the  world  why  we  should  not  go  ahead  with  shipping  on  a  large 
basis.  We  have  the  cooperation  of  the  people,  and  the  country  and 
the  Government  will  give  its  indorsement  and  assistance. 

As  far  as  the  laws  are  concerned,  they  need  certain  modifications 
and  this  is  only  with  the  object  of  putting  a  ship  at  as  little  disad- 


103 

vantage  as  possible  the  world  over.  As  far  as  the  seamen's  act  is 
concerned  I  do  not  think  that  any  of  us  would  wish  the  seamen  to 
receive  less  pay  than  they  do  now.  We  are  all  heartily  in  favor  of 
doing  everything  possible  to  see  that  the  steamers  are  manned  to  a 
large  extent  and  as  far  as  possible  with  American  officers,  seamen, 
engineers,  and  firemen.  It  is  essential  to  the  trade  of  the  United 
States  that  we  do  this,  and  this  war  has  clearly  demonstrated  the  im- 
portance of  the  national  flag  in  each  country. 

Xow,  as  far  as  the  plan  for  the  establishment  of  maximum  rates 
is  concerned,  I  would  like  to  say  this  about  Government-fixed  rates. 

The  rates  in  foreign  countries  are  controlled  by  an  association  of 
business  interests  and  our  ships  will  have  to  meet  this  competition. 
It  is  practically  impossible  to  fix  a  rate  for  a  general  cargo.  You  may 
have  agreements  from  certain  ports  to  certain  ports,  and  a  great  many 
times  you  are  unable  to  apply  them. 

As  to  a  monopoly.  I  do  not  see  any  danger  of  a  monopoly  as  far  as 
the  selling  of  the  steamers  is  concerned.  We  have  always  advocated 
that  they  should  be  sold  to  private  individuals  or  corporations  on  the 
basis  of  25  per  cent  in  cash  and  75  per  cent  due  under  favorable  con- 
ditions, the  mortgage  in  this  case  to  be  held  by  the  United  States.  Of 
course  a  certain  number  of  steamers  would  have  to  be  retained  for  the 
Army  and  Navy  and  their  service.  Barring  these,  all  steamers  should 
be  sold  free  and  clear,  just  as  the  steamers  of  the  other  nations  of  the 
world  are  free  from  any  encumbrances  or  handicaps.  Our  steamers 
should  have  this  freedom,  as  they  are  in  competition  with  the  other 
nations  of  the  world.  In  order  to  compete  with  them  you  have  to  be 
just  as  free  as  they  are.  The  Government  should  come  in  and  see  that 
we  get  fair  play  in  the  foreign  countries  where  we  go. 

When  these  ships  are  sold  they  should  be  scattered  throughout  the 
ports  of  the  United  States,  and  this  should  be  regulated  by  the  United 
States  Shipping  Board,  and  they  should  do  their  utmost  to  see  that 
they  are  scattered  and  not  all  congregated  in  any  one  place. 

Xow  as  regards  a  maximum  rate,  the  United  States  Shipping  Board 
should  realize  that  in  the  majority  of  cases  the  freight  rate  is  paid  by 
the  consuming  country  and  not  by  the  exporting  country.  There  is 
no  use  in  our  attempting  to  handicap  our  steamers  with  rate  condi- 
tions that  are  not  applicable  to  the  steamers  of  other  countries  coming 
to  our  ports.  Our  ships  should  be  in  a  position  to  trade  with  other 
nations  of  the  world  and  not  be  expected  to  make  way  for  these  foreign 
ships  if  we  are  are  going  to  build  up  a  general  shipping  business.  And 
this  is  what  the  United  States  must  do  first. 

The  big  proposition  to-day  is  to  get  into  the  world  trade  as  other 
nations  have  gotten  into  it,  and  into  competition  with  the  other 
nations. 

(Mr.  Hurley  asked  Mr.  Franklin  for  his  views  on  a  Federal 
charter.  Mr.  Franklin  replied  that  it  would  be  a  great  deal  better 
to  have  only  one  law  in  the  shipping  business,  and  a  Federal  charter 
would  make  it  possible  to  get  away  from  some  of  the  difficulties  that 
the  railroads  and  other  corporations  have  experienced,  and  if  there 
are  Federal  laws  for  this,  it  would  make  for  a  sounder  condition, 
and  would  enable  the  Government  to  deal  with  the  question  as  a 
whole.) 

Mr.  HURLEY.  Then  you  recommend  a  Federal  charter? 


104 

Mr.  FRANKLIN.  Yes ;  that  is  what  we  have  felt,  so  that  you  would 
have  but  one  Government  agency  to  deal  with  instead  of  leaving  it 
open  so  that  it  would  be  necessary  to  deal  with  the  several  State 
governments. 

It  affords  opportunities  for  every  State  to  get  into  the  business, 
so  that  no  one  State  could  pass  laws  not  favorable  to  the  other 
States.  But  what  we  are  most  anxious  for  is  to  make  it  a  national 
movement  and  not  to  localize  it.  As  far  as  we  are  concerned,  we 
feel  that  your  plan  generally  is  the  plan  to  work  from.  We  are  not, 
however,  in  favor  of  the  Government  director  on  the  board.  There 
is  no  more  reason  for  this  than,  if  we  could  buy  or  lease  a  house, 
that  someone  should  live  there  to  see  what  you  are  going  to  do  in  the 
premises. 

Mr.  E.  L.  BOGERT,  of  the  University  of  Illinois.  Mr.  Chairman,  I 
am  here  simply  as  a  visitor.  I  Avas  not  able  to  be  here  yesterday, 
and  I  have  not  formulated  any  opinions,  nor  have  I  got  any  instruc- 
'  tions.  I  should  like  to  make  one  suggestion,  however,  on  one  point 
that  has  been  brought  up,  and  that  is  the  sale  of  these  wooden  ves- 
sels. There  is  undoubtedly  a  market  for  wooden  vessels  in  the 
South  American  coastwise  trade,  and  if  they  ar.e  to  be  sold,  there 
isn't  any  question  but  what  they  could  be  placed  there,  probably  with 
advantage,  and  that  the  development  of  that  South  American*  coast- 
wise trade,  which  up  to  this  time  has  been  sadly  neglected,  would 
afford  both  a  market  for  the  ships  which  probably  would  not  be> 
marketed  for  our  oAvn  coastwise  trade,  and  would  also  greatly 
stimulate  the  trade  of  those  countries,  and  would  lead  later  to  the 
further  development  of  the  ocean  trade  in  which  we  would  share. 

Mr.  HURLEY.  Thank  you  very  much.     May  I  state  for  your  in- 
formation and  for  the  information  of  the  other  gentlemen  present 
that  we  are  selling  wooden  ships  every  few  days.     We  are  selling 
them  as  fast  as  we  possibly  can,  and  we  allow  the  flag  to  be  trans- " 
ferred  to  any  foreign  nation.     That  has  been  going  on  for  a  month. 

We  would  like  to  hear  from  Mr.  E.  D.  Bowen,  of  Texas,  of  the 
Division  of  Agriculture,  Mississippi  Valley  Association. 

Mr.  K.  D.  BOWEN,  of  Paris,  Tex.,  representing  the  Division  of 
Agriculture  of  the  Mississippi  Valley  Association.  Mr.  Chairman,  I 
don't  know  of  any  class  of  our  citizens  any  more  interested  in  the 
transportation  problem  than  the  agricultural  masses.  The  Ameri- 
can people  have  not  had  a  merchant  marine  for  so  long  that  there 
are  many  mooted  questions  to  be  considered.  There  is  one  thing  cer- 
tain, that  an  American  merchant  marine  can  not  be  successfully 
maintained  by  American  citizens  or  by  the  American  Government 
unless  it  is  upon  a  basis  where  it  can  compete  with  the  foreign- 
owned  merchant  marine. 

I  am  not  an  authority  on  this  subject,  and  I  don't  know  of  anyone 
else  engaged  in  agricultural  pursuits  who  is  an  authority  on  the  "sub- 
ject. In  fact,  I  know  very  few  people  engaged  in  any  other  line  of 
business  who  are  an  authority  on  this  subject.  A  great  many  people 
seem  to  think  they  are,  and  give  suggestions,  some  of  which  would 
prove  disastrous  if  carried  out*. 

Just  about  the  time  that  the  armistice  was  signed  our  ports  on  the 
Gulf  were  jammed  with  commerce  largely  of  the  agricultural  class. 
1  was  requested  to  come  up  and  urge  in  securing  tonnage.  I  found 


105 

everyone  apparently  trying  to  do  his  best.  I  found  great  confusion. 
I  happened  to  be  here  on  the  llth  of  December  last,  and  the  record 
of  that  hearing  ought  to  be  read  by  every  American  citizen,  as  there 
were  some  representative  exporters,  mainly  from  New  York  City,  in 
this  room,  who  gave  a  report  of  the  existing  conditions  which  every 
American  citizen  ought  to  read  and  know  before  they  advocate  the 
Government  turning  loose  these  ships  too  quickly.  We  are  fortunate 
in  having  a  Shipping  Board  that  opened  its  great,  big,  generous 
hearts  and  gave  us  our  first  ships  that  were  turned  loose  for  com- 
merce— turned  to  the  Gulf  for  cotton.  I  recall  the  case  of  one 
steamer,  the  Zirkel.  That  steamer  was  sent  to  Galveston  at  the  re- 
quest of  its  owners.  Before  that  steamer  loaded  her  cargo  and  sailed 
for  its  destination,  the  freight  rate  had  changed  3  times.  When 
that  ship  was  first  allocated  to  Galveston  for  cotton,  the  freight  rate 
prevailing  was  $6.25  per  hundred  pounds.  The  normal  rate  is  35  or 
40  cents  a  hundred  pounds.  Before  she  had  been  loading  very  long 
the  rate  changed  to  $4.75  per  hundred  pounds,  and  before  she  finally 
sailed  the  rate  was  $1.50  per  hundred  pounds.  Now,  will  you  please 
tell  me  what  company  could  stand  such  a  change  as  that  fluctuation 
in  that  time?  I  am  convinced  that  normal  conditions  must  return 
to  our  country  before  the  ships  are  turned  over  to  private  ownership. 
I  don't  believe  the  ships  ought  to  be  owned  by  the  Government  in  pub- 
lic commerce.  There  is  great  pressure  against  ship  subsidies.  I  un- 
derstand that  foreign  Governments  if  they  did  grant  ship  subsidies 
have  ceased  it.  I  have  been  reliably  informed  that  they  give  a  sub- 
sidy all  the  same  in  the  way  of  higher  charges  for  the  mails  and 
other  Government  service.  I  know  nothing  about  that. 

It  has  been  a  long  time  since  I  pulled  on  the  lee  main  brake;  I 
have  pulled  on  it,  and  I  recall  the  freight  conditions  that  existed 
then  and  the  very  brief  experience  I  had  in  that  line,  the  experience 
I  have  had  since  then  convinced  me  that  we  must  go  slow  and  return 
to  normal  conditions  before  it  would  be  safe  for  these  ships  to  be 
turned  over  to  private  parties  to  operate.  I  believe  they  should  be 
owned  by  private  concerns.  Our  Government  should  cooperate  not 
only  in  the  merchant  marine  but  in  other  lines  of  business,  commerce 
and  otherwise,  as  I  happen  to  know  foreign  governments  do. 

When  the  ships  are  completed — and  it  will  take  some  time  to  com- 
plete all  of  those  contracted  for — and  normal  conditions  are  resumed 
all  over  the  world,  I  believe  then  it  will  take  quite  a  while  before  pre- 
war conditions  return.  That  they  will  return  we  are  all  satisfied,  but 
until  that  time  does  arrive  I  don't  believe  it  would  be  to  the  interest 
of  our  citizenship  generally,  and  especially  to  the  agricultural  inter- 
ests, for  the  Government  to  turn  these  back  to  private  owners ;  and 
when  that  time  does  arrive,  the  ship  should  be  sold  in  such  a  manner 
that  all  sections  of  the  country  would  have  a  fair  deal.  A  sugges- 
tion has  been  made  by  some  gentlemen  that  a  cash  payment  of  2t>  per 
cent  should  be  made.  I  dare  say  there  are  some  companies  in  some 
sections  who  could  readily  afford  to  pay  100  per  cent  down.  I  don't 
think  the  terms  should  be  so  stiff.  I  know  when  the  war  broke  out 
that  a  move  was  started  to  buy  some  steamers  in  1914  and  1915.  None 
of  us  knew  anything  about  the  steamship  business  and  we  soon  found 
we  had  struck  a  snag.  We  wanted  to  buy  those  steamers  to  ship  farm 
products  across  the  water,  as  they  were  then  badly  needed.  We 


106 

agreed  upon  a  price  for  those  steamers  from  the  Gulf  ports  and 
arranged  the  purchase,  but  our  Government,  for  some  reason,  some 
good  reason  I  dare  say,  would  not  assure  us  that  the  Stars  and  Stripes 
would  be  protected  on  the  seas.  So  we  abandoned  this.  Other  par- 
ties, perhaps  a  little  more  bold,  undertook  this  work  and,  I  have  been 
told,  their  steamships  paid  for  themselves  in  one  or  two  trips.  I 
don't  know  anything  about  that,  but  I  understand  that  it  is  true. 

Now  I  am  satisfied  that  down  in  the  Gulf  ports  there  are  not  very 
many  companies — there  are  a  few — who  are  in  a  position  to  establish 
at  once  and  maintain  a  line  of  steamships,  which  must  be  drawn 
from  the  Gulf  ports,  so  as  to  reach  all  ports  of  the  world  and  get 
return  cargoes  as  well  as  outgoing  cargoes. 

The  reason  that  we  took  the  interest  we  did  from  the  farmer's 
standpoint  is  the  fact  that  you  can't  export  a  lot  of  grain,  a  lot  of 
live  stock  or  live-stock  products,  a  lot  of  cotton,  without  it  creating 
a  vacuum,  and  the  only  thing  that  can  fill  that  vacuum  again  will 
be  products  of  a  like  nature,  and  the  more  of  these  that  are  exported, 
the  greater  market  there  will  be  for  farm  products,  whether  they  are 
raw  or  in  a  finished  state;  and  while  the  mass  of  the  farmers  have 
not  considered  this,  I  know  it  is  a  fact  from  a  fairly  intelligent  stand- 
point, I  mean  to  say  from  the  standpoint  of  a  fair  knowledge  of  all 
the  intricacies  relating  to  the  merchant  marine.  Those  few  who 
have  studied  it — the  overwhelming  majority  of  those  who  have 
studied  it  and  have  discussed  it  have  expressed  similar  views,  but 
as  a  body  they  have  taken  no  general  action. 

Now,  Mr.  Chairman,  in  operating  these  ships  and  disposing  of 
them,  the  first  consideration  should  be  given  to  the  effect  it  will  have 
on  the  agriculture  of  the  United  States,  from  the  fact  that  without 
agriculture  you  won't  have  any  ships;  that  is,  you  won't  have  any- 
thing for  the  ships  to  do.  The  farmers  can  get  along  without  ships ; 
they  can  exist  without  ships.  The  reason  I  say  that  is  because  they 
have  done  it.  It  is  true  it  was  before  the  time  of  Columbus,  but 
they  have  done  it  once,  but  I  will  be  hanged  if  the  ships  can  get 
along  without  the  farmers.  You  have  got  to  have  farm  products, 
and  those  farmers  must  be  cooperated  with  upon  a  basis  of  equity 
and  upon  a  "tote  fair"  basis.  And  that  is  the  way  the  shipping 
question  should  be  and  must  be  solved. 

I  am  convinced  that  private  ownership  at  the  proper  time  will 
be  the  way  to  solve  it.  I  notice  that  quite  a  number  of  gentlemen 
say,  "  When  that  time  arrives."  Now  each  one  has  been  very  careful 
not  to  state  when  that  time  will  arrive.  That  reminds  me  of  an  oil 
expert  down  our  way.  If  you  wanted  to  hire  his  services  in  order 
to  tell  you  how  much  oil  there  was  in  the  ground  and  where  it  was, 
he  would  tell  where  the  oil  could  be  found.  One  man  hired  him  and 
he  looked  around  and  said,  "There  is  oil  here."  "How  far?" 
"Well,  if  you  go  deep  enough."  "  How  far?"  He  wouldn't  say  how 
far  it  would  be  necessary  to  go.  If  a  man  went  5,000  feet  or  10,000 
feet  and  didn't  strike  oil,  this  fellow  would  say,  "  You  didn't  go  deep 
enough."  It  was  a  very  safe  proposition.  Now,  I  don't  know  when 
the  proper  time  will  arrive,  and  I  don't  believe  there  is  a  man  in 
this  room  who  does  know.  I  believe  that  possibly  some  people  in 
this  country  want  the  ships  turned  loose  right  now,  but  if  they  are, 
they  are  not  in  the  position  to  handle  them.  I  don't  believe  it  would 
be  to  the  interest  of  our  people  at  large,  and  I  am  quite  sure  it  would 


107 

not  be  to  the  interest  of  the  agricultural  masses,  in  which  class  I 
have  cast  my  lot  for  many  years  past,  as  the  chairman  is  well  aware. 
But  I  don't  believe  that  it  would  be  to  the  interest  of  any  commercial 
enterprise  of  this  country  for  the  Government  to  turn  loose  those 
ships  right  away,  before  normal  times  return.  I  thank  you. 

Mr.  GREGORY.  I  Avould  like  to  know  what  you  mean  by  "  turning 
loose  right  away." 

Mr.  BOWEN.  I  mean  that  this  Congress  ought  not  to  pass  a  law 
right  now  authorizing  the  sale  of  these  ships  now. 

Mr.  GREGORY.  You  mean  they  should  be  turned  over  to  private 
operation — that  is,  that  the  Government  instead  of  selling  them 
ought  to  charter  them  or  allocate  them  to  private  firms  ? 

Mr.  BOWEN.  Yes,  sir. 

Mr.  GREGORY.  Or  do  you  mean  to  have  them  operated  by  the  Gov- 
ernment ? 

Mr.  BOWEN.  I  think  that  private  firms  should  operate  them. 

Now,  Mr.  Chairman,  I  was  requested  to  file  a  resolution  that  was 
adopted  by  the  American  Cotton  Association  recently  formed  in  New 
Orleans.  I  was  not  present  at  the  meeting.  That  resolution  reads  as 
follows : 

NEW  OKLEANS,  LA.,  May  14,  1919. 

Resolved,  As  it  is  correctly  reported  that  the  United  States  Shipping  Board  is 
preparing  to  sell  the  steamships  built  by  the  Emergency  Fleet  Corporation,  we 
hereby  enter  our  vigorous  protest  against  such  action. 

We  consider  the  present  time  inopportune  for  the  general  sale  of  these  ships. 
The  country  is  not  prepared  to  absorb  them,  and  their  sale  now  would  mean  their 
falling  into  the  hands  of  unfriendly  and  possibly  alien  interests. 

Provision  should  be  made  by  the  Government  before  selling  these  boats  to  see 
that  all  exporters  and  all  United  States  ports  have  adequate  ship  tonnage  to  take 
care  of  their  exporters  and  importers. 

Gulf  and  South  Atlantic  ports  have  not  had  sufficient  ships  to  take  care  of 
export  cotton  and  other  export  traffic  for  many  months.  Cotton,  grain,  lumber, 
and  other  products  are  now  being  offered  at  Gulf  and  South  Atlantic  ports  far 
in  excess  of  ships  necessary  to  move  it. 

Resolved,  That  the  Shipping  Board  ships  should  be  utilized  to  build  up  Ameri- 
can foreign  trade,  and  allocated  on  a  fair  basis  to  all  American  ports.  The 
representatives  of  the  cotton  States  here  assembled  demand  proper  recognition 
of  Gulf  and  South  Atlantic  ports,  and  the  assignment  of  ships  of  standard  effi- 
ciency sufficient  to  move  their  foreign  commerce.  We  realize  that  it  has  been 
necessary  to  assign  a  certain  proportion  of  Shipping  Board  steamers  to  European 
food  relief,  and  we  have  patiently  refrained  from  protesting  against  this.  We 
feel  now,  however,  that  it  is  vital  that  ships  be  furnished  to  move  our  export 
cotton  still  on  hand  and  that  steps  be  taken  to  assure  adequate  ships  to  move 
next  season's  crop. 

While  ships  have  been  furnished  from  time  to  time  by  the  Shipping  Board, 
this  method  has  been  very  uncertain  and  unsatisfactory.  They  should  be  allo- 
cated sufficiently  far  ahead  to  assure  us  in  advance  that  our  export  requirements 
will  be  taken  care  of. 

Resolved,  That  a  copy  of  these  resolutions  be  sent  to  the  Hon.  Mr.  Edward  N. 
Hurley,  chairman  of  the  United  States  Shipping  Board,  and  to  all  the  Senators 
and  Representatives  of  the  States  represented  here,  with  the  request  that  we  be 
given  immediate  relief. 

The  foregoing  resolution  was  presented  by  Mr.  John  M.  Parker,  of  New 
Orleans,  to  the  cotton  convention  in  session  in  New  Orleans  May  14,  1919,  and 
unanimously  adopted. 

R.  G.  PLEASANT,  Chairman. 
LEON  STEINBEEGEE,  Secretary. 

Mr.  ROSSETER.  Mr.  Chairman,  the  question  of  subsidy  is  one  of 
which  we  are  all  very  gun  shy,  but  nevertheless  it  is  one  of  so 
many  parts  and  of  such  great  importance  to  every  pursuit  in  the 


108 

United  States  and  to  all  parts  of  the  country  that  it  is  one  that  must 
also  be  somewhat  considered. 

Now,  for  the  purpose  of  making  the  record  right,  I  should  like  to 
say  at  this  time  with  respect  to  the  maritime  policy  of  foreign  na- 
tions in  connection  with  Mr.  Bowen's  statement,  that  the  policy  of  at 
least  three  great  nations  has  been  and  still  is  aiding  the  merchant 
marine  under  their  respective  flags.  Of  these,  probably  the  most 
notable  is  Japan,  which  has  been  for  years  and  is  still  paying  an. 
indirect  subsidy  of  as  much  as  $10,000  a  day  in  support  of  "regnfar 
lines,  and  that  this  subsidy  is  aided  and  directed  in  such  a  mamier 
that  its  citizens  abroad  as  well  as  those  at  home  are  very  considerably 
aided  in  the  daily  operations  of  their  business. 

Mr.  C.  E.  PLUMMER.  Mr.  Chairman,  for  the  purpose  of  prevent- 
ing any  misunderstanding  of  what  the  gentleman  has  just  saul,-l 
think  we  would  like  to  have  it  go  into  the  record — may  I  ask  him 
whether  or  not,  say  during  the  10  years  preceding  the  World  War, 
you  found  tonnage  to  ship  your  goods  across  ? 

Mr.  BOWEN.  Adequate  tonnage? 

Mr.  PLUMMER.  Yes. 

Mr.  BOWEN.  As  a  rule,  yes.  Unfortunately  it  was  not  American 
ships. 

Mr.  PLUMMER.  That  is  what  I  wanted  to  bring  out,  that  before 
the  war  there  was  tonnage ;  there  will  be  tonnage  after  the  war.  The 
question  is,  Will  the  tonnage  fly  the  flag  of  this  country  ? 

Mr.  ROSSETER.  Right. 

Mr.  HURLEY.  Mr.  Emerson  Lucas.  I  have  got  it  wrong  here  on 
my  pad.  He  represents  the  foreign  commerce  service  of  the  South- 
ern Railway  lines.  [There  was  no  response.] 

We  would  like  to  hear  from  Mr.  E.  M.  Herr,  of  the  American 
Manufacturers'  and  Exporters'  Association,  New  York  City. 

Mr.  E.  M.  HERR,  of  the  American  Manufacturers'  and  Exporters' 
Association,  New  York  City.  Mr.  Chairman,  I  am  here  from  the 
American  Manufacturers'  and  Exporters'  Association,  but  as  our 
president  is  also  here  and  is  in  very  much  closer  touch  with  these 
affairs  than  myself,  I  would  prefer  to  have  you  call  on  him,  Mr. 
George  E.  Smith,  president  of  the  American  Manufacturers'  and 
Exporters'  Association,  New  York  City. 

Mr.  GEORGE  E.  SMITH,  president  of  the  American  Manufacturers' 
and  Exporters'  Association,  New  York  City.  Mr.  Chairman,  the 
manufacturers  are  interested,  of  course,  in  this  proposition,  not  from 
the  standpoint  of  being  experts  on  shipping.  We  feel  that  that  is 
much  better  in  the  hands  of  those  thoroughly  acquainted  with  it. 
but  we  are  interested  in  the  service  to  these  ports  and  these  markets 
which  you  are  trying  to  build  up,  and  we  are  interested  in  com- 
petitive rates. 

The  committee  on  shipping  went  into  the  matter  quite  thoroughly 
and  we  reported  back  to  the  board  of  directors,  and  with  your  per- 
mission I  will  read  just  briefly  these  matters  which  sum  up  our 
resolutions. 

On  March  5  the  board  of  directors  adopted  the  following  resolu- 
tion: 

Be  it  resolved,  That  the  board  of  directors  of  the  American  Manufacturers' 
Export  Association,  after  consideration  of  the  problem,  recommend  the  fol- 
lowing means  of  utilizing  the  ships  now  built  and  building  by  the  United 


109 

States  Government,  to  the  end  that  a  permanent  and  available  American 
merchant  marine  may  be  established. 

First.  All  ships  owned  by  the  United  States  Government,  or  building  or  con- 
tracted for  by  the  Government,  should  be  sold  to  American  ship  operators  at 
the  earliest  moment  after  a  proper  basis  for  such  sale  can  be  established. 

Second.  The  price  at  which  these  ships  are  sold  should  not  exceed  the  cost  of 
foreign-built  ships  of  the  same  class  and  tonnage. 

Third.  The  Government  should  exercise  control  to  the  extent  of  establishing 
maximum  rates. 

Fourth.  Some  guaranty  should  be  given  to  operators  of  American  ships  that 
under  certain  conditions  and  for  a  limited  time  they  will  be  reimbursed  for 
losses  sustained  in  handling  business  at  competitive  rates  where  the  revenue  is 
not  sufficient. 

On  April  2  another  board  meeting  was  held,  and  a  resolution  was 
adopted  as  follows: 

Resolved,  That  the  board  of  directors  of  the  American  Manufacturers  Ex- 
port Association  indorses  the  general  features  of  the  plan  advanced  by  Chair- 
man Hurley  of  the  Shipping  Board  lor  the  operation  of  the  ships  now  built 
and  building  by  the  United  States  Government,  namely,  the  sale  of  these  ships 
to  private  American  operators  at  prices  reflecting  the  current  world  market  for 
similar  tonnage,  the  fixation  of  maximum  rates  by  the  Government,  and  pro- 
vision for  the  reimbursement  of  private  operators  under  certain  conditions,  and 
for  a  limited  time  for  losses  sustained  in  handling  business  at  competitive  rates 
where  the  revenue  is  not  sufficient  to  cover  operating  cost. 

On  May  22,  after  further  consideration  of  the  situation  as  brought 
up  to  date,  this  resolution  was  passed: 

In  view  of  the  passing  of  the  emergency  requiring  the  building  of  ships  by 
the  Government  in  large  numbers,  the  Government  should  now  allow  private 
enterprise  and  competition  to  assume  this  work  as  contracts  and  obligations 
already  assumed  are  fulfilled. 

EXHIBIT  D. 

RESOLUTIONS    ON    OPERATION    OF    AMERICAN    MERCHANT    MARINE. 

[Resolution  adopted  Mar.  5,  1919.] 

Whereas  the  Nation's  foreign  trade  can  not  be  successfully  developed  without 
an  American  merchant  marine  able  to  transport  American  products  as  cheaply, 
as  regularly,  and  as  efficiently  as  products  of  other  countries  are  carried. 
Our  naval  authorities  have  declared  that  both  for  the  training  of  American 
seamen,   and  for  the  necessary  victualing  and  supplying  of  the  Navy  when 
operating  in  foreign  waters,  an  auxiliary  merchant  marine  is  essential.     In 
fact,  the  Secretary  of  the  Navy,  in  a  letter  to  this  association,  said,  "  I  feel 
that  the  proper  enlargement,  the  influence,  and  the  wise  use  of  such  a  merchant 
marine  is  the  biggest  question  now  to  be  solved  by  the  American  people." 

The  establishment  and  maintenance  of  an  American  merchant  marine  is, 
therefore,  a  matter  in  which  every  citizen  of  the  country  is  vitally  interested. 

Be  it  resolved,  That  the  board  of  directors  of  the  American  Manufacturers 
Export  Association,  after  consideration  of  the  problem,  recommend  the  follow- 
ing means  of  utilizing  the  ships  now  built  and  building  by  the  United  States 
Government  to  the  end  that  a  permanent  and  available  American  merchant 
marine  may  be  established. 

First.  All  ships  owned  by  the  United  States  Government  or  building  or  con- 
tracted for  by  the  Government,  should  be  sold  to  American  ship  operators  at 
the  earliest  moment  after  a  proper  basis  for  such  a  sale  can  be  established. 

NOTE. — There  is  substantial  agreement  in  all  well-informed  quarters  that  Government 
operation  of  our  merchant  marine  is  not  desirable.  The  complexities  of  ship  operation 
demand  an  intimacy  with  changing  trade  conditions,  and  the  ability  to  make  instant 
decisions,  which  would  place  the  Government  at  a  disadvantage  in  C9mpeting  with 
privately-owned  ships  of  other  nations.  Chairman  Hurley  of  the  Shipping  Board  has 
emphatically  stated  that  our  merchant  marine  should  be  privately  operated.  Private 
enterprise  and  responsibility,  alone,  will  enable  us  to  build  up  a  permanent  and  profit- 
able American  lleet,  in  the  face  of  energetic  competition.  Once  private  operation  is 
admitted,  private  ownership  follows  as  a  matter  of  course,  to  place  the  entire 
responsibility  upon  the  operator. 


110 

Second.  The  price  at  which  these  ships  are  sold  should  not  exceed  the  cost 
of  foreign-built  ships  of  the  same  class  and  tonnage. 

NOTE. — Private  ship  operators  will  naturally  not  purchase  an  American  ship  if  they 
can  buy  a  similar  ship  for  less  money  from  other  countries.  American  owners  can  not 
successfully  compete  with  foreign  owners  if  the  foreign  owner's  initial  investment  is 
from  $300.000  to  $500,000  less  for  each  ship  operated.  Unless  this  equal  basis  is 
provided,  American  ship  operators  can  not  be  expected  to  buy,  and  the  boats  will  re- 
main on  the  Government's  hands. 

Third.  The  Government  should  exercise  control  to  the  extent  of  establishing 
maximum  rates. 

NOTE. — Since  the  ships  have  been  built  at  national  expense,  the  ships  should  be 
operated  in  a  manner  to  bring  the  greatest  possible  return  to  the  nation.  Such  return 
is  to  be  found  in  the  stimulation  of  the  nation's  foreign  trade  which  means  added 
markets  to  the  manufacturer  and  farmer,  added  employment  to  the  workingman  and 
added  business  .prosperity  to  the  merchant.  For  proper  development  of  foreign  trade, 
American  goods  should  be  carried  at  the  lowest  rates  consistent  with  a  reasonable 
return  to  the  private  investor  in  American  ships.  The  Government,  therefore,  has  the 
right  and  the  duty  to  fix  maximum  rates. 

Fourth.  Some  guaranty  should  be  given  to  operators  of  American  ships 
that  under  certain  conditions  and  for  a  limited  time  they  will  be  reimbursed 
for  losses  sustained  in  handling  business  at  competitive  rates  where  the  revenue 
is  not  sufficient  to  cover  operating  cost. 

NOTE. — Under  the  La  Follette  Act  and  our  other  existing  navigation  laws  and  because 
of  the  American  wage  scale,  private  ship  operators  are  dubious  of  their  ability  to  meet 
the  competition  of  foreign-owned  ships  when  normal  conditions  return  and  available 
cargo  space  equals  or  exceeds  the  cargo  offered.  Furthermore,  our  commerce  requires 
the  opening  of  new  ocean  routes  which  can  hardly  be  profitable  for  some  time  to  come. 
Both  these  conditions  require  that  the  Government  make  provision  to  compensate  private 
owners  for  operating  losses  sustained  through  no  fault  of  the  operator  whenever  they 
occur,  until  the  present  disparity  in  navigation  laws  here  and  abroad  is  altered,  and 
conditions  become  more  favorable  to  American  shipping. 

[Resolution  adopted  April  2,  1919.] 

ResoJrcd,  That  the  board  of  directors  of  the  American  Manufacturers'  Export 
Association  indorses  the  general  features  of  the  plan  advanced  by  Chairman 
Hurley  of  the  Shipping  Board  for  the  operation  of  the  ships  now  built  and 
building  by  United  States  Government ;  namely,  the  sale  of  these  ships  to  pri- 
vate American  operators  at  prices  reflecting  the  current  world  market  for  simi- 
lar tonnage,  the  fixation  of  maximum  rates  by  the  Government,  and  provision 
for  the  reimbursement  of  private  operators  under  certain  conditions,  and  for  a 
limited  time  for  losses  sustained  in  handling  business  at  competitive  rates 
where  the  revenue  is  not  .sufficient  to  cover  operating  cost. 

[May  22,] 

Resolved,  In  view  of  the  passing  of  the  emergency  requiring  the  building  of 
ships  by  the  Government  in  large  numbers  the  Government  should  now  allow 
private  enterprise  and  competition  to  assume  this  work  as  contracts  and  obliga- 
tions already  assumed  are  fulfilled. 

Mr.  HURLEY.  Mr.  H.  H.  Raymond,  of  the  American  Steamship 
Association,  New  York  City. 

Mr.  RAYMOND.  Mr.  Chairman,  my  position  here  to-day  is  really 
as  a  substitute  for  a  member  of  the  committee  which  the  American 
Steamship  Association  appointed,  of  which  committee  Mr.  Franklin 
was  made  the  chairman.  He  has  so  ably  and  so  thoroughly  covered 
this  situation  and  covered  the  views  of  the  members  of  that  associa- 
tion, and  I  unqualifiedly  endorse  them,  that  anything  I  might  say 
would  appear  superfluous,  and  I  beg  to  be  excused. 

Mr.  HURLEY.  Mr.  E.  S.  Goodsell,  representing  the  South  American 
Commission  of  California,  and  the  island  growers  of  Porto  Rico. 

Mr.  GOODSELL.  I  do  not  know  whether  you  realize  it  or  not,  but  I 
think  this  is  really  a  very  historical  conference  in  the  history  of  the 
United  States.  This  is  the  first  time  that  official  Washington  has 
recognized  the  agriculturists  of  the, United  States.  [Applause.]  I 
think  it  is  due  to  the  men  who  are  responsible  for  the  calling  of  this 
meeting  and  the  agriculturists  should  show  their  appreciation  of  their 


Ill 

judgment  and  acumen  in  giving  us  this  opportunity  to  present  our 
views. 

At  the  request  of  the  Harrisburg  Agricultural  Commission;  also 
the  growers  of  perishables  on  the  island  of  Porto  Rico,  and  of  the 
same  bodies  of  men  in  the  West  Indies  generally,  I  want  to  call  the 
attention  of  the  Shipping  Board  to  two  essential  policies  which  I 
believe  the  agriculturists  are  entitled  to  present  for  the  carrying  out 
of  the  future  policies  of  construction  of  ships  of  the  Emergency  Fleet 
Corporation  to  meet  their  needs. 

One  of  these  is  speed.  Shipping  men  all  know,  and  I  know,  be- 
cause I  have  a  wide  experience  in  shipping,  that  you  can  go  into 
every  part  of  the  world  and  find  the  9  and  10  knot  carriers.  Fifty 
years  ago  sailing  ships  were  quite  acceptable  to  the  trade ;  25  years  ago 
10-knot  ships  were  considered  as  suited  to  the  needs  of  the  shippers, 
but  to-day  agriculture  has  become  such  a  great  power  in  tonnage,  that 
we  must  consider  the  needs  of  the  agriculturists  and  the  agriculturists 
do  not  want  any  10-knot  vessels.  Agricultural  products,  to  be  moved 
profitably  and  successfully,  must  be  done  expeditiously. 

Therefore,  I  say  the  policy  of  the  Shipping  Board  should  be  con- 
fined to  building  12-knot  ships  to  meet  the  needs  of  the  agriculturists 
and  to  do  just  a  little  better  than  the  tonnage  producers  in  any 
other  part  of  the  world.  You  may  say,  "  It  costs  money  to  build  a 
12-knot  ship."  You  must  remember  the  turn  around  of  a  12-knot 
ship  partly  compensates  for  the  cost  of  its  building. 

The  other  essential  that  I  would  like  to  call  the  attention  of  the 
board  to  is  that  of  refrigeration ;  which  should  be  installed  in  a  large 
number  of  American  ships.  Just  think  of  it;  Great  Britain  to-day 
has  247  ships  with  40,000,000  cubic  feet  of  refrigeration,  capable  of 
carrying  500,000  tons,  gross  tons,  of  frozen  meat.  'The  Emergency 
Fleet  Corporation  has  14,  according  to  its  records  up  to  May  1. 

When  I  say  to  you  that  in  California  there  are — where  the  aver- 
age crops  are  produced  in  the  Northwest,  as  well  as  California — there 
are  ninety  million  tons  of  perishables  that  could  be  aided  very  ma- 
terially by  refrigeration  in  the  carrying  of  these  products  safely  and 
landing  them  in  sound  condition ;  in  Cuba  there  are  twenty  million ; 
in  Porto  Rico,  thirty  million;  in  the  perishables  produced  nearby  the 
port  of  Xew  York — Philadelphia  and  Boston — there  are  fifteen  mil- 
lions of  cubic  feet  required  for  the  transportation  of  these  perishable 
products,  making  a  total  about  200,000.000  tons  which  will  require 
refrigeration,  you  can  understand  there  is  a  wyide  field  afloat  for  this 
support  of  American  ships.  In  addition  to  this,  please  remember  that 
the  better  facilities  the  agriculturists  are  given  the  more  encourage- 
ment they  receive  to  produce. 

I  want  to  state  one  incident  which  took  place  in  Port  Rico;  because 
it  is  a  good  illustration  of  wyhat  prevails  in  all  parts  of  the  world, 
particularly  the  west  coast  of  this  country.  Port  Rico  with  about 
750 — mostly  Americans — engaged  in  producing  these  perishables 
from  that  island  have  an  average  crop  of  about  a  million  and  a  half 
packages.  When  they  put  these  on  the  steamer,  under  the  present  ar- 
rangement without  refrigeration,  on  a  five-day  voyage  to  New  York, 
their  experience  has  led  them  to  expect  that  of  the  total  value  of  the 
million  and  a  half  packages  they  will  receive  back,  in  less  dollars  than 
would  be  the  case  with  refrigeration,  about  $500,000.  That  is  stag- 
gering, because  if  you  were  producers  and  had  given  all  your  years 


112 

to  producing  perishable  products,  you  would  hope  to  get  about  ninety 
cents  on  the  dollar,  but  they  only  get  about  sixty  cents ;  and  they  have 
gone  along  year  after  year  hoping  that  something  would  turn  up  to 
help  them  out  in  the  moving  of  their  crops  properly. 

So  that,  I  say  one  of  the  greatest  benefits  which  will  come  from  this 
conference  will  be  the  adding  of  capable  carriers  to  take  care  of  the 
handling  of  the  perishable  products,  and  which  will  conserve  the 
waste  that  has  been  estimated,  so  far  as  the  port  of  New  York  is  con- 
cerned— I  am  talking  about  the  imports  of  all  countries,  of  course. 
There  is  sufficient  waste  in  one  year  in  the  port  of  New  York  to  feed 
the  entire  population  of  New  York  for  one  month.  These  figures  are 
staggering,  and  should  not  continue,  and  it  is  our  point  of  view  that 
the  policy  of  the  Emergency  Fleet  Corporation  should  be  such  that 
the  producer  can  be  encouraged  rather  than  discouraged  as  he  is  under 
the  present  conditions. 

In  order  that  these  facts  and  figures  may  be  before  the  Emergency 
Fleet  Corporation,  I  am  leaving  a  rough  brief,  stating  what  I  have 
just  said. 

TWO    SUGGESTIONS    SUBMITTED   FOR    CONSIDERATION    AS    DESIRABLE   POLICIES    TO    ADOPT 
•  FOR  AMERICAN  EMERGENCY  FLEET   STEAMERS. 

1.  Build  only  12-knot  freighterers. 

2.  Equip  100  with  insulated  refrigerated  holds. 

In  shipping,  the  operator  possessing  advantages  of  speed,  size,  or  equip- 
ment his  competitor  does  not  invariably  lifts  the  offering  tonnage. 

There  are  comparatively  few  12  to  14  knot  freighterers  afloat.  Why  not  adopt 
as  a  future  policy  of  the  E.  F.  Co.  the  building  of  this  class?  One  Spanish  com- 
pany is  doing  so. 

American  shipping,  outside  of  lines  engaged  in  banana  carrying,  possesses  not 
more  than  a  dozen  partly  equipped  insulated  refrigerated  steamers. 

In  the  British  mercantile  marine  are  229  steamers  with  a  refrigerating  capac- 
ity of  45,000,000  cubic  feet,  equivalent  to  nearly  500,000  frozen-meat  tons.  In 
addition,  23  steamers  of  over  7,000,000  cubic  feet  are  building.  To  meet  the 
competition  it  would  appear  desirable  to  equip  not  less  than  100  steamers  with 
insulation  space  of  100,000  to  200,000  cubic  feet  in  each.  These  are  needed 
for  trade  from  the  Pacific  coast,  through  the  Panama  Canal,  to  the  Atlantic 
coast  ports,  America  to  South  America,  America  to  England,  to  France,  to 
Italy,  and  to  Spain,  with  perishables  not  possible  to  ship  now  for  lack  of  these 
facilities.  Return  cargoes  of  perishables  can  always  be  lifted  from  all  the 
above  countries,  except  from  England  and  South  America. 

From  New  York,  Boston,  and  Philadelphia,  in  normal  years,  15,000,000  cubic 
feet  of  apples  have  gone  to  England  and  Scotland.  These  would  be  conserved 
by  refrigeration  facilities,  which  are  limited.  These  figures  do  not  include  the 
very  large  cubic  refrigerated  tonnage  required  for  the  transportation  and  ex- 
portation of  meat,  butter,  and  eggs  from  America  to  England,  capable  of  large 
expansion  with  proper  shipping  facilities. 

As  to  the  requirements  of  Porto  Rico,  Cuba,  Florida,  and  California  refrig- 
erated tonnage  to  New  York : 

The  soil  of  Porto  Rico  is  suitable  only  for  growing  fruit,  sugar,  and  tobacco 
crops.  There  are  about  750  fruit  growers  engaged  in  the  industry,  mostly 
Americans. 

About  500,000  boxes  of  oranges,  500,000  of  grapefruit,  and  500,000  of  pineapples 
constitute  an  average  crop,  with  increasing  yield  promised  each  year  hereafter 
if  better  transportation  is  promised.  Each  box  measures  about  3  cubic  feet. 

There  is  a  heavier  movement  of  fruit  from  February  to  September  than  be- 
tween September  and  February.  There  is,  however,  at  all  times  abundant  other 
tonnage  offering.  A  weekly  service  is  regularly  maintained  now  on  a  five-day 
scnedule  to  New  York.  There  are  other  'irregular  sailings  from  time  to  time. 

From  records  accurately  and  carefully  made  up,  we  find  that  due  to  none  of 
the  steamers  having  refrigerated  holds,  great  loss  to  growers  results  from  the 
decay  which  takes  place  during  the  five-day  voyages  to  New  York. 


113 

The  Porto  Rico  Fruit  Exchange  in  1918  shipped  in  sound  condition  from  San 
Juan  to  New  York  216,360  boxes  of  grapefruit  of  a  value  of  $574,000.  On  ar- 
rival the  decay  was  removed,  as  required  by  the  board  of  health,  and  10,322 
box.es  (5  per  cent)  were  put  on  board  the  same  steamer  and  dumped  at  sea. 
The  loss  to  the  growers  in  money  was  $32,766.  The  same  year,  of  87,560  boxes 
of  oranges  with  a  value  of  $279,000,  13,590  boxes  or  about  one-sixth  loss,  hav- 
ing a  cash  value  of  $46,604  to  the  growers.  Of  140,346  crates  of  pineapples 
valued  at  $444,426,  14,231  (10  per  cent)  with  a  cash  value  of  $40,644  were  lost 
in  removing  the  decay.  Thus  in  the  three  commodities  in  one  year  the  ex- 
change members  fruit-growers  were  out  of  pocket  $114,054,  which  steamers 
equipped  with  refrigerators  would  have  saved. 

It  is  estimated  that  all  the  Porto  Rico  fruit  growers  lost  by  decay  $300,000,  in 
audition  to  the  foregoing,  with  a  depreciation  in  values  as  a  result  of  prejudice 
from  decay  of  $150,000.  Hence  the  fruit-growing  interests 'of  the  island  re- 
spectfully request  the  Emergency  Fleet  Corporation  to  equip  forthwith  four  12 
Q  14  knot  steamers  of  3,000  to  4,000  tons  each,  with  not  less  than  100,000 
cubic  feet  in  each  steamer  of  insulated  space  to  encourage  the  fruit  growing 
industry  of  the  island,  to  conserve  waste  and  thereby  supply  consumers  with 
these  foods  at  a  less  cost  than  will  ever  be  the  case  with  continued  depletion  of 
supplies  by  unnecessary  waste. 

Similarly  Cuba  needs  four  steamers,  Florida  six,  and  California  not  less 
than  twelve  (7,000  tons  gross)  to  carry  the  fruit  products  of  each  of  these  im- 
portant fruit  growing  sections  by  waterway  commerce  to  Atlantic  ports. 

Cuba  produces  about  1,000,000  (4,000,000  cubic  feet)  boxes  of  pineapples  and 
perishables  annually.  Florida  ships  about  8,000,000  (24,000,000  cubic  feet) 
boxes  of  citrus  fruits  yearly.  California  and  the  Northwest  fruit  crops,  citrus, 
deciduous,  and  apples  aggregate  annually  about  90,000,000  cubic  feet. 

There  is  a  good  proportion  of  the  total  of  200,000,000  cubic  feet  of  perishables 
from  Cuba,  Florida,  and  California  and  Atlantic  ports  awaiting  the  facilities 
for  shipment  by  properly  constructed,  insulated,  refrigerated  hold  space  in 
American  emergency  fleet  steamers. 

Mr.  HURLEY.  Mr.  P.  H.  W.  Koss,  president  of  the  National  Marine. 

Mr.  Ross.  Mr.  Chairman  and  gentlemen,  it  gives  me  very  great 
pleasure  indeed  to  have  the  honor  of  addressing  a  body  like  this.  I 
do  not  known  that  I  can  add  very  much  to  the  details  of  the  profes- 
sion which  you  yourselves  so  ably  represent,  but  I  think  I  can,  per- 
haps, be  of  use  in  this  way. 

For  going  on  nearly  10  years  we  have  been  trying  to  instill  into 
the  minds  of  the  voters  of  this  country,  especially  the  Middle  West, 
that  this  matter  of  shipping  is  something  more  than  an  industry  per 
se.  That  it  is  a  key  industry  or  a  pivotal  industry  on  which  the  total 
success  of  every  branch  of  industry  in  the  United  States  depends. 

Until  the  war  came  there  were  probably  very  few  men  in  this  coun- 
try, and  probably  very  few  who  are  now  in  this  room,  who  ever  heard 
of  the  words  "  key  industry  or  pivotal  industry,"  and  we  found  our- 
selves deprived  of  dyes  and  chemicals  and  certain  elements  in  metals. 
Not  until,  certainly,  the  lack  of  dyes  came  did  we  understand  the  full 
significance  of  the  words  "  key  industry  or  pivotal  industry,"  an  in- 
dustry that  did  not  begin  and  end  with  itself,  but  the  lack  of  which 
element  affected  every  industry.  All  the  textile  industries,  wool,  silk, 
cotton,  everything  you  can  think  of — wall  reaper — was  affected  by 
the  lack  of  dyes,  so  that  we  then  came  to  realize  that  there  was  such 
a  thing  as  a  key  industry. 

Now  we  are  getting  into  the  heads  of  the  voters  of  the  Middle  West, 
upon  whom  you  had  to  depend  for  your  legislation,  that  the  conduct 
of  the  shipping  industry  is  something  upon  which  their  own  pros- 
perity depends. 

The  results  we  have  obtained  have  been  satisfying  indeed,  and  I  am 
particularly  proud  of  the  fact  that  in  some  parts — in  the  city  of  St. 
121034—19 8 


114 

Louis— there  came  the  wonderful  order  a  few  days  ago  for  20  ships 
from  the  United  States  Shipping  Board.  Also,  another  thing  that 
has  caused  us  satisfaction  is  that  in  the  Legislature  of  the  State  of 
Missouri  they  have  a  nautical  training  bill  introduced,  and  this  would 
be  an  eye  opener  to  our  forefathers,  that  100  years  ago  they  would  not 
have  believed,  they  could  not  have  conceived  that  in  the  middle  of 
this  great  continent  a  State  legislature  could  endeavor  to  pass  a  bill 
for  the  training  of  young  men  to  become  efficient  on  the  high  seas. 

If  we  bear  in  mind  this  great  fact  that  shipping  is  an  industry 
which  affects  every  other  industry,  then  I  think  we  can  get  the  same 
attitude  toward  "shipping  that  the  country  has  so  wisely  taken  toward 
agricultural  interests  of  the  country.  You  know  that  the  Govern- 
ment has  guaranteed  a  price  of  $2.26  per  bushel  for  wheat  until  June, 
1920.  That  really  was  a  very  wise  move.  Many  people  thought  it 
was  a  concession  to  the  farmers'  vote.  But  it  was  not.  The  Govern- 
ment understood  perfectly  well  that  the  matter  of  encouraging,  of 
stimulating,  agriculture  was  really  a  question  that  would  reach  far 
beyond  the  range  of  the  farmers'  operations  and  affect  the  country 
itself  at  large. 

The  thought  that  I  would  like  to  put  before  the  Shipping  Board 
is  that  the  operation  of  ships  should  be  made  attractive  and  useful 
to  every  grade  of  citizens  in  the  United  States  of  America,  because 
unless  maritime  securities  are  carried  by  the  population  at  large  in 
the  same  way  as  was  done  in  Europe,  and  the  same  way  as  was  done 
with  the  Liberty  loans,  because  you  all  know  the  Liberty  loans  were 
not  successful  until  the  people  got  under  them ;  and  so,  this  has  to  be 
made  attractive  to  the  masses,  so  that  they  will  get  under  it  and  carry 
the  load  and  not  leave  it  to  the  few  of  you  who  are  responsible  for 
conducting  the  maritime  business  of  this  country. 

In  order  to  do  this  certain  concessions  must  be  made.  I  think  there 
are  very  few  people  outside  of  this  room,  and  perhaps  not  many  in 
this  room,  that  understanding  this  fact,  namely,  that  the  laws  of  this 
country  constitute  American  ships,  in  fixed  routes,  as  common  car- 
riers. Now,  the  law  of  Great  Britain  designates  that  ships  are  not 
necessarily  common  carriers.  You  know  what  that  means;  the  rail- 
road is  a  common  carrier.  They  receive  certain  privileges ;  the  exer- 
cise of  the  right  of  eminent  domain ;  lands  may  be  taken  from  you  and 
me  and  given  to  the  railroads.  They  have  received  these  advantages 
at  the  expense  of  the  community  at  large.  That  does  not  apply  in 
the  shipping  business.  Under  the  United  States  law  the  very  first 
clause  of  the  shipping  act  provides  that  the  tramp  ship  shall  not  be  a 
common  carrier,  but  that  the  ships  which  have  a  definite  route  and 
definite  destination  are  common  carriers.  Now,  mark  what  the  differ- 
ence means;  in  1913,  at  the  first  meeting  of  the  National  Foreign 
Trade  Council,  I  recall  that  Mr.  Franklin  gave  us  some  wonderful 
figures;  some  marvelous  figures.  He  told  us  that  at  that  time, 
roughly  speaking — he  made  this  statement  in  1914,  and  referred  to 
the  tonnage  of  1913 — our  last  normal  year — for  1913  there  were 
25,000  vessels  practically  carrying  the  tonnage  of  the  world.  Of 
these  1,555  only  were  regular-route  vessels,  23,455  were  tramp ;  23,455 
vessels  then  would  be  excluded  from  the  privileges  of  the  shipping  act 
and  only  1,555  would  be  subject  to  it.  Isn't  that  startling?  Espe- 
cially when  you  consider  that  we  American  citizens  have  to  run  these 


115 

tramps.  How,  then,  are  we  going  to  make  conditions  attractive  to 
the  average  American  citizen?  We  know  perfectly  well  it  is  legisla- 
tion which  controls  conditions  under  wrhich  a  business  may  or  may 
not  be  profitable;  and  that  we  must  go  to  the  people  of  the  Middle 
West,  because  they  constitute  51  per.  cent  of  the  voting  strength  of 
this  country. 

Now,  I  would  suggest  if  we  are  to  stimulate  agricultural  production 
by  any  artificial  and  fixed  process,  and  you  must  also  remember  that 
the  profits  in  the  shipbuilding  industry  have  been  predicated  upon 
the  excess-profits  tax  then  in  force,  consequently  any  yard  turning  out 
a  respectable  number  of  ships  would  return  through  the  Treasury  of 
the  United  States  Government  a  very  substantial  sum  which  would 
bring  down  the  cost  of  these  contracts  considerably.  We  believe  that 
all  taxes  and  excess-profits  taxes  charged  to  shipbuilders  should  be 
remitted  by  the  Government  on  exactly  the  same  principle  as  that 
which  the  Government  recognized  and  pursued  with  regard  to  guar- 
anteeing a  minimum  price  of  $.2.20  a  bushel  on  wheat. 

In  the  case  of  wheat  price  protection  the  Government  very  wisely 
recognized  the  fact  that  the  stimulation  of  agriculture  was  something 
far  more  than  merely  favoring  the  farmers.  They  sawr  that  the  life 
of  the  Xation  was  dependent  upon  the  encouragement  of  farming 
during  the  war.  Now,  that  tltat  particular  crisis  has  passed  we  are 
facing  the  fact  that  American  industry  will  be  prostrated  unless  the 
key  or  pivotal  industry  of  shipbuilding  and  ship  operation  is  firmly 
established.  All  things  hang  on  the  control  of  the  oceanic  transpor- 
tation of  American  goods  being  in  American  hands. 

In  any  event  whatever  taxes  shipyards  pay  should  not  go  into  the 
general  funds  of  the  Government,  but  should  be  returned  to  the 
Shipping  Board  to  aid  in  the  further  development  of  the  shipping 
business. 

The  business  can  only  be  developed  if  made  more  than  ordinarily 
profitable  at  the  start  because  the  oceanic  jitneys,  the  tramps  of  the 
world,  will  speedily  regulate  freight  rates. 

Mr.  Franklin  showed  you  that  unless  you  make  it  strongly  interest- 
ing to  men  to  come  in  they  won't  come  in  at  all,  but  shipping  is  so 
fascinating,  is  so  elusive,  and  so  complex  experience  has  proven  that 
if  a  man  goes  into  it  he  will  hang  to  it,  life  or  death.  I  do  not  know 
why.  So  if  you  once  get  a  large  body  of  men  throughout  the  country 
to  engage  in  the  shipping  business  yau  may  not  need  to  be  afraid  that 
you  are  going  to  create  a  monopoly  or  make  them  permanently  rich 
by  any  encouragement  you  give  them  as  an  initiative  because  the 
freight  steamers,  the  tramp  steamers,  the  ocean  jitney,  as  I  said  before, 
of  the  world,  will  very  speedily  reduce  the  freightages  as  time  goes 
on,  but  to  get  them  started  you  must  do  for  the  shipping  men  what 
37ou  have  done  for  the  farmers — you  must  encourage  them  to  put  their 
money  into  the  enterprise. 

I  did  not  expect  to  speak  to-day  at  any  length.  I  thought  perhaps 
I  might  be  allowed  to  speak  twro  or  three  minutes,  and  I  think  that  is 
all  that  I  have  taken  up,  but  I  do  want  to  say  this  that  I  think  the 
shipping  fraternity  on  the  whole  can  congratulate  itself  on  the  atti- 
tude of  the  country.  I  know  that  eight  or  nine  }7ears  ago  when  we 
started  on  this  work  they  laughed  at  us.  They  used  to  call  me  ;i  John 
the  Baptist,*'  a  voice  calling  out  in  the  wilderness.  They  said,  "'  We 


116 

hope  37ou  will  live  long  enough  to  see  your  dreams  come  true."  Those 
who  have  followed  our  work  since  that  first  convention  in  1914,  right 
here  in  this  city,  have  found  that  the  current  of  events  have  justified 
us  in  our  predictions,  and  we  have  done  this  great  thing;  we  have 
worked  tooth  and  nail,  and  will  -to  the  end  of  our  days  in  getting  the 
appreciation  of  the  country — in  getting  them  to  appreciate  the  fact 
that  shipping  is  as  vital  to  the  regularity  of  employment  in  the  inte- 
rior and  it  is  the  one  great  thing  on  which  their  success  or  failure 
depends,  and  they  must  participate  in  shipping,  and  by  every  means 
in  their  power  they  must  help  Mr.  Hurley,  or  if  there  should  be  any 
change  in  the  administration  they  should  come  in  and  give  their  help 
to  the  administration  in  power,  instead  of  wasting  their  time  attack- 
ing the  personnel  or  the  events  which  have  happened  in  the  past  or 
bewailing  this  or  bewailing  that.  The  mill  will  not  grind  with 
water  that  has  passed  beneath  it,  and  it  is  up  to  us  to  be  optimistic 
and  industrious  and  make  the  shipping  people  welcome  and  do  every- 
thing we  can  for  them  in  every  mortal  way  we  can  think  of.  [Ap- 
plause.] 

Mr.  HURLEY.  Mr.  Marsh. 

Mr.  MARSH.  The  National  Farmers'  Council,  that  is  the  union  of 
about  three-quarters  of  a  million  farmers.  Mr.  Chairman,  the  point 
has  been  raised  by  two  or  three  speakers  here  that  the  farmers  have 
been  subsidized.  Now  of  course  that  statement  was  made  in  order 
to  justify  the  appeal  for  subsidy  for  ships.  I  would  like  to  challenge 
any  one  of  these  gentlemen  here  to  point  out  in  what  way  the  farmers 
have  been  subsidized. 

On  wheat  they  were  getting  $1.25  a  bushel  more  when  the  price  of 
wheat  was  set.  If  wheat  were  an  open  competitive  proposition  now 
we  would  be  paying  a  great  deal  more,  all  of  us,  probably  $3  a  bushel. 
I  think  Mr.  Hoover  said  $3.  There  has  been  no  subsidy  to  farmers, 
and  we  very  much  regret  that  that  statement  and  some  other  exposi- 
tions of  economics  as  applied  to  economics  have  been  equally  coll  a - 
tioned.  I  want  to  tell  you  right  now  that  the  farmers  don't  believe 
in  it,  and  let  me  add,  gentlemen,  that  I  am  deeply  grateful  for  the 
statements  made  at  this  conference,  for  they  will  be  sufficient  to  defeat 
the  sale  of  ships  to  private  companies,  I  am  pretty  confident,  when 
we  get  these  facts  into  every  agricultural  paper  among  farm  leaders, 
and  that  will  be  in  a  few  days.  We  are  grateful  to  you.  When  we 
write  the  farmers,  the  bankers'  associations,  the  Harvester  Co.,  what 
their  opinion  is  regarding  a  ship  trust  they  will  be  pretty  nearly  unani- 
mous against  it.  They  will  say,  "  gentlemen,  nothing  doing."  I  want 
to  express  my  appreciation  for  this  discussion,  and  also  that  the  chair- 
man has  specifically  stated  that  this  matter  is  to  go  to  Congress,  and 
this  conference  is  not  to  bind  the  Shipping  Board  in  its  policy. 

Mr.  HURLEY.  I  will  say  further  that  the  records  of  this  meeting 
wall  be  printed  and  given  to  each  member  here  so  that  they  may  have 
them  as  a  matter  of  record. 

Mr.  MARSH.  Of  course,  we  appreciate  that,  but  the  point  is  we 
want  this  question  of  policy  to  go  up  to  the  duly  elected  representa- 
tives of  the  people  of  America  and  let  them  decide  the  policy  in  the 
light  of  all  the  facts.  Now,  I  am  constrained  to,  at  the  request  of 
the  gentlemen  who  were  here  yesterday,  two  of  whom  have  left  for 
the  West,  representing  the  Farmers'  National  Council,  to  state  that 


117 

the  farmers  do  not  regard  farm  bureaus  as  really  farm  organizations 
without  any  detriment  or  discourtesy  to  the  gentlemen  here  rep- 
resented. 

Mr.  HURLEY.  Will  you  define  what  they  do? 

Mr.  MARSH.  The  farm  bureaus  are  subsidized  by  the  taxes  which 
we  pay  to  provide  appropriations  for  the  Department  of  Agriculture 
and  the  farmers  don't  believe  in  subsidy  to  their  own  organizations 
any  more  than  they  do  to  the  shipping  industries  of  America.  We 
w^ould  like  to  know  at  what  meeting  the  members  of  the  farm  bureaus 
authorized  the  gentlemen  who  spoke  yesterday  on  behalf  of  the 
Illinois  and  the  Iowa  farm  bureaus,  to  attempt  to  represent  their 
attitude,  if  I  correctly  understood  their  statements,  the  farmers  of 
those  two  States  as  opposed  to  the  plan  which  the  Farmers'  National 
Council  has  proposed. 

(Mr.  Marsh  reads  statement  of  Mr.  Howard  of  Mar.  23.) 

The  American  Society  of  Equity  is  one  of  the  strongest  farm 
organizations  in  Iowa,  and  they  are  affiliated  with  the  National 
Farmers'  Council.  I  note  that  in  passing,  because  I  think  it  is  only 
fair,  and  may  I  also  read  this  letter  from  Mr.  Matthew  Wald,'  as- 
sistant to  Mr.  Gompers.  Mr.  Wald  was  also,  if  I  am  correctly  in- 
formed, secretary  of  the  committee  on  reconstruction  of  the  American 
Federation  of  Labor.  The  letter  is  as  follows: 

It  is  evident  that  your  association  and  the  American  Federation  of  Labor  are 
in  accord  in  the  essential  features  relating  to  the  American  merchant  marine. 

I  do  not  know  that  this  speaks  sufficiently  for  the  American  Fed- 
eration of  Labor ;  it  is  under  date  of  February  24. 

Gentlemen,  the  cat  is  out  of  the  bag..  The  shipping  industry 
wants  subsidy.  Elihu  Root  made  a  splendid  speech  a  few  years  ago 
for  a  ship  subsidy  and  the  farmers  woke  up  and  you  didn't  get 
Ji  ship  subsidy  and  you  are  never  going  to  until  the  farmers  turn  up 
their  toes  and  go  into  shipping  business  to  make  money.  Inciden- 
tally they  charge  that  the  farmers  are  making  too  much  money. 
If  you  are  not  making  money  why  in  the  name  of  heavens  don't 
you  go  into  the  farming  industry  and  get  rich?  [Faint  applause.] 
That  is  a  proposition  respectfully  submitted. 

Gentlemen,  in  devious  ways  Government  help  has  been  suggested 
for  the  merchant  marine.  The  farmers  trust  the  Government.  I 
am  mighty  sorry  that  so  many  of  you  gentlemen  have  such  a  terrible 
opinion  of  your  Government.  We  farmers  do  not  share  it.  It  may 
be  necessary  to  change  both  political  parties  and  substitute  them  by 
neAv  ones,  but  to  return  to  the  status  quo.  It  Avas  to  herald  the  birth 
of  a  new  day,  and  apparently  the  farmers  realize  that  the  new  day 
is  not  only  born  but  it  is  a  lusty  infant  who  is  not  going  to  any  great 
extent  by  precedents. 

The  farmers  insist  that  these  ships  shall  remain  in  the  hands  of 
the  Government  and  be  democratically  operated,  probably  in  some 
such  hands  as  we  suggested  to  Mr.  Hurley,  a  holding  corporation 
administered  alongr  the  line  of  the  brotherhoods  for  the  railroads, 
but  with  this  distinction  we  think  the  public  should  have  an  equal 
voice  in  the  management.  But  I  want  to  tell  you  if  they  are  to  run 
athwart  of  the  organized  policy  of  the  farmers,  they  will  be  in  the 
same  condition  as  the  packers.  Swift  spent  $1,800,000  in  advertis- 
ing last  year,  but  there  is  a  recoil  of  judgment.  I  have  orders  from 
most  of  the  leading  farm  journals  for  articles  on  the  public1  side 


118 

versus  the  packers.  A  packer  attorney  was  president  of  the  United 
States  Chamber  of  Commerce.  They  wanted  to  turn  the  Federal 
Trade  Commission  out.  The  farmers  went  to  the  bat  and  the  com- 
mission is  still  there. 

Gentlemen,  it  is  a  good  thing  that  the  agricultural  interests  were 
invited  here.  The  point  was  made  the  first  time,  I  believe,  by  this 
board.  I  want  to  tell  you  right  now  if  this  administration  and  pre- 
vious administrations  had  kept  in  closer  touch  with  farmers  of 
America,  both  political  parties,  and  the  people  of  America  to-day 
would  not  be  praying  to  God  that  they  might  segregate  Bolshevism 
and  keep  it  within  the  bounds  of  Europe.  You  would  have  done 
better  to  follow  the  farmers'  advice.  [Fragments  of  applause.  ] 

Mr.  HURLEY.  Mr.  J.  R.  Howard,  Iowa  Farm  Bureau. 

Mr.  HOWARD.  I  didn't  intend  to  take  up  any  further  time  at  this 
conference.  I  have  been  very  much  interested  in  all  of  the  discus- 
sions. It  has  been  a  privilege  to  hear  the  talks  from  the  various  rep- 
resentatives here.  But  since  the  statement  or  the  authority  by  which 
I  am  here  has  been  somewhat  challenged  in  the  way  of  an  intimation 
that  I  represent  a  subsidy  of  the  Department  of  Agriculture.  I  wish 
to  say  that  I  absolutely  do  not.  I  presume  you  are  all  familiar  with 
the  farm  bureau  and  the  work  of  the  county  agents.  The  State  Fed- 
eration of  Farmers,  which  I  represent,  has  nothing  to  do  with  any  na- 
tional funds,  tolerates  no  interference  in  any  way  whatever,  and 
refuses  even  to  receive  suggestions  from  any  part  of  the  Government. 
I  wish  to  say  that  as  farmers  we  consider  that  one  department  of 
this  Government  especially — I  might  as  well  name  it  but  I  will  not — 
has  been  Avholly  functioning  for  increasing  agricultural  production. 
I  wish  to  say  on  behalf  of  the  farmers  that  I  know  of  hardly  a  single 
instance  where  they  have  given  us  any  economical  consideration. 
Hence,  we  are  taking  the  organization  of  the  farm  bureau  and  cut- 
ting it  apart  from  the  Federal  and  State  funds  and  taking  up  the 
economic  side  of  agriculture ;  and  it  is  that  organization  which  I  rep- 
resent here  to-da}^  in  this  meeting  and  not  any  subsidized  organiza- 
tion. I  say  that  in  the  way  of  correction. 

Now,  I  wish  to  say  that  I  have  much  in  common  with  the  gentleman 
who  has  just  spoken.  I  assert  positively,  gentlemen,  that  the  price 
fixing  of  the  past  two  or  three  years  has  been  absolutely  against  the 
agricultural  interests  of  the  country.  We  have  been  losers.  By 
that  price  fixing  there  is  no  use  to  go  into  the  reasons  or  details  of 
this  at  this  meeting,  for  it  is  not  the  function  of  the  meeting — but  so 
far  as  the  question  before  this  meeting  is  concerned,  I  would  like  to 
reiterate  in  a  way  some  of  the  things  which  I  said  yesterday.  First, 
we  as  farmers,  in  Iowa,  believe  in  American  markets  for  American 
products  and  American  products  for  American  markets  as  long  as 
the  supply  and  demand  runs  even.  When  our  products  increase, 
then  we  want  them  put  into  the  markets  of  the  world  at  the  lowest 
possible  rates,  most  expeditiously  to  our  own  best  advantage,  and 
for  that  reason  we  are  studying  the  question  of  shipping  and  the 
merchant  marine  carefully.  I  think  I  made  the  statement  yester- 
day that  because  of  Government  control  of  railroads  we  are  opposed 
to  the  merchant  marine.  It  was  stated  after  I  spoke,  by  a  gentle- 
man from  another  State,  that  shipping  had  been  entirely  satisfactory 
in  that  State  under  Government  control  of  railroads.  I  wish  to  say 
that  I  myself  am  a  farmer  giving  my  entire  time  and  attention  to 


119 

farming  and  feeding  of  stock.  Not  in  a  big  way,  but  I  always  feed 
out  the  grain  which  I  raise  on  my  own  farm,  and  last  year  I  think 
I  shipped  some  8  or  10  carloads  of  stock  to  the  Chicago  market,  and 
I  want  to  give  you  my  testimony  that  our  freight  service  was  never  as 
bad  as  it  was  last  year  or  has  been  continually  since  the  Government 
took  control  of  the  railroads.  I  think  any  man  who  has  been  identi- 
fied with  the  live-stock  interests  of  this  country  will  tell  you  the 
same  thing.  That  doesn't  mean  that  the  Government  has  had  a 
fair  chance  in  Government  operation;  we  understand  all  that.  It 
is  not  necessarily  a  parallel  that  because  Government  control  of  rail- 
roads has  been  unsatisfactory  that  Government  ownership  and  opera- 
tion of  the  merchant  marine  would  be  unsatisfactory,  but  the  under- 
lying principles  of  Government  control  of  public  utilities  is  not  ap- 
proved by  the  farmers  of  the  Middle  West,  as  represented  in  the 
membership  of  the  organization  which  I  represent,  and  I  am  sorry 
that  Mr.  Thompson,  of  the  Illinois  Agriculture  Association,  is  not 
present  at  this  morning's  meeting,  but  he  authorized  me  to  make  a 
similar  statement  if  occasion  demanded  en  behalf  of  the  farmers  of 
Illinois. 

Just  a  further  word.  It  is  supposed  srenerallv  that  the  farmers' 
profits  have  been  very  great — exhbrbitant,  in  fact.  I  know  it  is  a 
very  wrong  impression.  We  are  not  getting  wonderfully  rich.  We 
are  making  a  fair  living,  but  in  considering  the  income  of  the  aver- 
age farmer  you  must  remember  that  our  business  is  like  yours.  We 
must  make  a  fair  return  upon  our  investment,  a  fair  labor  return 
for  ourselves  and  our  families,  and  we  must  provide  for  the  upkeep 
of  our  plant,  and  this  upkeep  means  the  maintenance-  of  the  fertility 
of  our  soil,  and  that  is  the  big  problem  to-day,  economically,  of  the 
American  farmers  of  the  corn  belt.  We  are  compelled  of  necessity 
if  production  increases  to  have  prices  which  will  enable  us  in  the 
Middle  West  to  buy  fertilizer  as  the  East  has  bought  it,  or  we  will 
have  to  submit  to  the  competition  of  the  coolie  labor  of  cheaper 
agricultural  products. 

Xow  as  to  the  question  of  merchant  marine  we  certainly,  as  farm- 
ers, have  not  arrived  at  any  definite,  irrevocable  conclusions  further 
than  my  own  sentiments,  the  sentiments  of  those  whom  I  represent, 
which  include  the  economic  organizations  of  Iowa  farmers,  the  Grain 
Growers'  Association,  meat  producers,  and  the  Wool  Growers' 
Association,  as  well  as  the  federations,  so  far  as  I  was  able  to  get 
a  referendum  of  opinion,  and  I  have  several  telegrams  from  other 
organizations  against  a  Government-owned  merchant  marine.  We 
are  opposed  to  a  subsidized  merchant  marine  also,  and  I  would  have 
been  glad  to  hear  the  matter  of  subsidies  discussed. 

I  simply  make  these  statements,  gentlemen,  and  take  this  valuable 
time  in  order  to  make  as  clear  as  I  can  the  position  which  I  hold.  I 
thank  you.  [Applause.] 

Mr.  MARSH.  May  I  apologize  for  having  misunderstood  what  the 
gentleman  represented  and  repeat  that  farm  bureaus  and  county 
agents  are  subsidized  by  the  Government.  [Cries  of  "  sit  down !  "] 

Mr.  CROWLEY.  Mr.  Chairman,  I  would  like  to  answer  that ;  he  said 
the  farmers  won  the  war.  Tell  me  how  the  farmers  won  the  war. 
The  sailors  and  the  ships  won  the  war. 

Mr.  HURLEY.  Everybody  won  it. 


120 

Mr.   CROWLEY.  If  it  wasn't  for  the  sailor  and  the  ships,  where 
would  we  be  to-day  ? 

(Meeting  recessed  at  1.05  to  reconvene  at  3. o'clock.) 


AFTER  RECESS. 


The  meeting  reconvened  at  3.20  o'clock  p.  m..  Chairman  Hurley 


Mr.  HURLEY.  We  will  hear  from  Mr.  F.  W.  Lincoln,  of  the  Ameri- 
can Exporters  and  Importers  Association. 

Mr.  F.  W.  LINCOLN,  of  the. American  Exporters  and  Importers 
Association,  New  York  City.  Mr.  Chairman  and  gentlemen,  I  have 
made  no  preparation  for  an  academic  discussion  of  this  subject.  Our 
committee  represents  the  American  Exporters  and  Importers  Asso- 
ciation. It  is  comprised  of  many  of  the  larger  and  smaller  shippers 
of  the  country,  both  export  and  import,  and  we  have  made  our  sug- 
gestions in  written  form  at  Mr.  Hurley's  request,  entirely  from  the 
point  of  view  of  the  shippers  of  the  country.  Many  of  the  members 
of  the  Association  are  the  successors  of  the  old  merchant  firms 
which  formerly  sent  their  cargoes  in  clipper  ships,  purchased  re- 
turn cargoes,  and  sold  them  on  the  market  here.  All  this  is  now 
changed,  but  in  approaching  the  -subject  from  a  shipper's  point  of 
view  it  has  been  our  object  to  make  suggestions  to  enable  our  shippers 
to  forward  products  of  the  manufacturers  of  the  country  with  the 
utmost  dispatch  to  such  markets  as  require  them. 

We  feel  that  the  Government  under  a  crisis  became  the  owner  of 
a  vast  fleet.  We  should  deplore  continued  Government  ownership 
We  believe  that  private  ownership  is  more  pliable,  that  it  will  work 
more  quickly  and  that  private  owners  can  adjust  themselves  to  for- 
eign competition  more  energetically  than  it  is  possible  under  our 
form  of  Government.  We  are  therefore  desirous  that  the  Govern- 
ment should  dispose  of  all  their  fleet  as  rapidly  as  is  resonable  under 
business  conditions.  We  believe  it  is  utterly  impossible  for  the  Gov- 
ernment to  unload  their  tonnage  on  private  interests  within  a  short 
period,  and  that  they  must  perforce  continue  ownership  for  some 
considerable  period.  I  think  none  of  us  can  say  how  long  that  will 
be  necessary.  In  the  meantime  those  ships  must  have  employment. 
We  are  urging  that  those  ships  be  given  employment  to  establish 
shipping  interests  from  the  west  and  the  east  coast  on  such  terms 
as  the  law  of  supply  and  demand  must,  perforce,  make  possible  or 
necessary. 

The  committee  drew  up  a  memorandum  for  the  Shipping  Board  at 
Mr.  Hurley's  request  in  February.  We  have  looked  it  over  recently 
at  the  further  request  of  the  committee  and  we  have  seen  no  reason 
to  change  the  suggestions  we  made  at  that  time.  With  your  permis- 
sion, Mr.  Chairman,  I  will  hand  a  copy  of  the  memorandum  to  the  re- 
porter and  request  that  it  be  incorporated  in  the  record. 

EXHIBIT  F. 

SHIPPING  VIEWS  PREPAEED  BY  THE  SPECIAL  COMMITTEE  OF  THE  AMERICAN  EX- 
PORTERS AND  IMPORTERS  ASSOCIATION. 

1.  We  urge  the  prompt  return  to  private  ownership  of  all  American  vessels 
taken  over  by  the  Government  from  private  owners  during  the  war.  Also,  that 
all  vessels  now  under  military  and  naval  control  suitable  for  commercial  re- 
quirements, shall  be  released  for  such  purposes  as  quickly  as  p.ossible. 


121 

2.  We  urge  that  all  restrictions  shall  be  at  once  removed  so  that  tonnage, 
foreign  or  American,  seeking  business,  may  be  chartered  for  foreign  trade  in 
free  competition  for  private  requirements,  and  that  all  regulations  with  respect 
to  trading  routes,  cargo,  etc.,  be  forthwith  rescinded. 

3.  We  recommend  the  sale  to  proved  American  citizens,  firms,  or  corpora- 
tions, of  all  vessels,  wooden,  iron,  or  steel,  now  owned  or  to  be  owned  by  the 
Government,  which  are  not  suitable  for  commercial  purposes  or  for  operation 
in  deep  sea  business,  or  required  for  immediate  Government  necessities.     Ves- 
sels to  be  sold  on  easy  terms  of  payment,  to  be  fixed  by  the  United  States 
Shipping  Board,  and  on  a  parity  of  cost  at  which  such  vessels  could  now  be 
built  abroad,  or  less  if  necessary. 

4.  We  emphatically   urge,  in  view  of  the  enormous  financial  sacrifices   al- 
ready made  through  war  requirements,  and  so  as  to  secure  as  great  a  saving 
of  the  people's  money  as  possible,  also  to  aid  our  shipyards  and  protect  our 
labor  market,  and  to  create  a  merchant  marine  to  protect  our  foreign  com- 
merce— that  the  building  program  of  the  Government  shall  be  promptly  con- 
tinued and  completed. 

We  strongly  urge  that  no  more  wooden  ships  shall  be  contracted  for,  or 
even  finished  unless  the  contracts  are  so  far  completed  that  not  to  finish  the 
work  would  entail  practically  a  loss  of  the  entire  outlay. 

WTe  advise  that  all  steel  vessels  not  completed  or  still  to  be  built  under  con- 
tract, shall  be  finished  or  built  on  the  best  possible  lines  suitable  for  foreign 
trade,  these  plans  to  be  settled  by  experts;  and  that  no  vessel,  unless  already 
largely  finished,  shall  be  less  than  8,000  to  10,000  tons  dead  weight  capacity, 
or  of  less  speed  than  10  to  12  knots  per  hour — except  a  reasonable  number  of 
steamers  of  about  2,500  to  5,000  tons  dead  weight  capacity  for  requirements 
in  the  West  Indies,  for  short  voyages,  or  for  shallow-water  ports. 

5.  We  recommend  that  our  coastwise  trade  shall  be  restricted  to  American- 
owned  and  American-built  vessels. 

6.  We  advocate  that  no  vessel  holding  an  American  registry  shall  be  allowed 
to  be  transferred  to  a  foreign  flag  without  Government  permission. 

7.  We  object  to  the  Government  relinquishing  ownership  in  vessels  taken  over 
during  the  war,  which  were  partially  completed  or  contracted  for  at  our  ship- 
yards, whether  contracts  were  for  foreign  or  American  interests. 

8.  We  urgently  advocate  'the  immediate  establishment  by  the  Government  of 
strictly  American  lines,  fast  mail,  passenger,  and  freight  lines,  with  regular 
sailings  from  such  ports  of  the  United  States  n>-  may  be  for  the  best  interests 
of  our  commerce,  to  the  principal  markets  of  the  world,  under  supervision  of 
the  United   States  Shipping  Board.     These  lines  to  be  handled  under  liberal 
Government  terms  of  contract  for  agreed  periods  by  American  firms  or  cor- 
porations    The  management  of  the  vessels  allocated,  after  an  agreement  has 
been  arrived  at  between  respective  parties,  to  be  entirely  in  the  hands  of  the 
private  firm  operating ;  the  Government,  however,  to  have  the  right  to  supervise 
all  freight  rates  to  be  charged. 

Parties  operating  these  lines  not  to  handle  foreign  tonnage  on  any  of  the 
routes  established. 

Parties  handling  the  lines  to  have  the  right,  under  liberal  provisions  as  to 
price  and  time  of  payment,  to  take  over  vessels  assigned,  so  that  the  Govern- 
ment would  be  gradually  relieved  of  ownership. 

Although  we  are  not  advocates  of  permanent  Government  ownership,  we  be- 
lieve that,  due  to  the  world's  present  shipping  condition,  and  in  view  of  the 
fact  that  the  United  State ;  now  owns  a  large  fleet  and  proposes  to  build  addi- 
tional tonnage,  also  because  we  do  not  think  American  capital  can  at  present 
largely  invest  in  shipping,  it  is  essential  that  the  ownership  of  all  vessels  un- 
sold shall  be  retained  by  the  Government  for  Mich  periods  as  shall  be  found 
necessary  to  protect  our  commercial  and  freight  interests. 

9.  It  is  well  known  that  American  ships  are  handicapped  in  securing  return 
cargoes   from   foreign    markets.'  Therefore   a   careful   study   of  this   question 
should  be  made  by  the  United  States  Shipping  Board,  and  everything  possible 
done  to  change  such  conditions. 

10.  We  urge  such  alterations  in  our  shipping  and  navigation  laws,  and  in  the 
so-called  La  Follette  legislation,  as  will  tend  to  place  American  shipping  on  a 
better  footing  in  competition  with  foreign  countries ;  and  that  we  should  ar- 
range with  maritime  nations  a  uniform  scale  of  measurement  to  apply  to  all 
steam  and  sailing  tonnage. 

11.  To   permit   of   the   successful   development   of  the  American   mercantile 
marine,  it  is  of  vital  importance  that  we  provide  for  the  establishment  in  for- 


122 

eign  parts,  and  particularly  thoe  on  the  great  ocean  trading  routes,  of  fuel 
depots,  whereby  our  vessels  can  obtain  supplies  of  American  fuel  at  lowest 
prices. 

12.  We  advocate  that  Government  vessels  not  available  for  or  allocated  to 
permanent  trade  routes,  shall  be  lea>  ed  or  chartered  to  American  individuals, 
firms,  or  corporations,  on  favorable  terms  which  will  enable  them  to  be  handled 
successfully  for  special  commercial  necessities ;  but  such  ships  not  to  be  placed 
on  the  loading  berths  by  operators  to  take  general  cargo  to  any  ports  to  which 
the  Government  has  established  a  regular  line. 

13.  We  ask  that  henceforth,  recognizing  the  fact  that  a  strong  competition 
between  all  nations  will  exist  in  the  carrying  trade,  a  firm,  determined  Ameri- 
can policy  shall  be  inaugurated,  to  the  end  that  rates  of  freight  from  this 
country  to  foreign  markets  shall  not  be  again  fixed  abroad,  as  was  the  case  be- 
fore the  war,  when  rates  were  largely  settled  in  London  and  Hamburg;  and 
that  the  manufacturers,  producers,  farmers,  and  exporters  of  our  country  shall 
have  equal  facilities  with  any  other  nation  in  handling  our  goods  abroad  and 
in  competing  with  the  world's  markets. 

Mr.  STEVENS.  We  will  hear  Mr.  W.  H.  Douglass,  of  the  American 
Exporters  and  Importers  Association,  New  York  City. 

Mr.  W.  H.  DOUGLASS,  of  the  American  Exporters  and  Importers 
Association.  Mr.  Chairman  and  gentlemen,  after  four  or  five  gen- 
tlemen have  spoken  on  this  subject,  which  has  been  so  thoroughly 
ventilated  for  the  last  30  years,  it  becomes  largely  a  process  of  repe- 
tition which  any  speaker  must  take  up,  no  matter  what  phase  of  the 
subject  he  discusses.  I  therefore  propose  to  try  and  get  away  from 
that  as  far  as  I  can,  although  it  isn't  possible.  There  is  one  thing 
which  we  all  recognize  as  now  absolutely  essential  and  necessary 
and  that  is  the  demand  of  the  American  people  that  we  shall  have 
American  lines  to  all  the  leading  markets  of  the  world.  I  think  that 
is  one  thing  which  we  can  all  agree  on,  and  as  we  go  along  I  am 
going  to  say  that  I  shall  let  them  simply  point  out  the  various  phases 
of  this  subject  which  we  do  agree  on,  all  of  us,  really  in  a  funda- 
mental way,  there  is  only  one  or  two  points  where  we  are  at  variance. 
Having  established  the  fact  that  we  want  these  lines,  we  then  neces- 
sarily must  reach  a  conclusion  as  to  how  we  are  going  to  arrive  at 
those  lines.  By  reason  of  the  great  war  we  have  acquired  this  fleet, 
a  fact  which  we  all  admit.  We  also  admit  that  this  fleet  is  .entirelv 
different  from  what  the  railroad  problem  is.  There  we  had  efficient 
service  satisfactory  to  the  American  people,  and  we  will  all  be  glad 
probably  when  that  service  is  returned  to  private  ownership,  but  now 
we  have  to  face  a  problem  that  is  different.  The  American  Nation 
has  acquired  these  vessels,  and  it  is  an  unknown  quantity  as  to 
whether  they  can  operate  them  to  advantage  or  whether  they  can 
not.  But  operation  under  some  system  has  to  be  arrived  at.  Per- 
sonally, it  seems  to  me  that  there  are  only  two  solutions.  You  have 
got  to  sell  all  these  ships  and  trust  to  luck  that  American  enterprise 
and  capital  will  operate  without  reference  to  any  other  considera- 
tion; or  you  have  got  to  sell  some  of  those  ships,  a  statement  on 
which  we  all  again  agree  on,  that  are  npt  useful  or  necessary  in  the 
deep-sea  trade  of  the  country.  There  we  stand.  Everyone  on  that 
basis. 

Now  that  leaves  us  with  a  large  amount  of  shipping,  probably  by 
1920,  which  must  be  operated  in  some  way.  Eliminating  the  fact  that 
we  don't  want  to  sell  those  ships,  all  of  them,  and  I  want  to  say  here, 
gentlemen,  frankly,  that  after  40  years'  experience,  not  in  the  shipping 
business,  but  in  watching  the  shipping  interests  of  the  country,  I  say, 


123 

without  hesitation,  that  if  you  cast  the  die  and  sell  those  ships  with- 
out reservation  to  any  man  who  wishes  to  buy  them,  if  there  is  Ameri- 
can capital  to  buy  them  (and  I  doubt  that),  I  don't  believe  you  are 
going  to  get  the  lines  which  the  American  public  demand  and  which 
they  wash. 

Therefore,  unwillingly.  I  admit,  but  nevertheless  conscientiously, 
I  believe  that  the  Government  must  retain  the  title  of  those  ships  for 
a  reasonable  period.  One  gentleman  this  morning  stated  that  none 
as  yet  had  had  the  courage  to  say  how  long  that  title  should  rest  with 
the  Government.  It  is  very  reasonable  to  say  that  no  man  said  that, 
because  no  man  could  properly  and  wisely  decide  that  point.  There- 
fore I  don't  see  that  there  was  anything  in  his  argument,  but  I  do 
believe  that  the  retention  of  that  title  of  those  ships,  which  go  on  the 
berth  for  the  different  ports  of  the  world,  will  have  to  be  held  by  the 
Government  for  a  period  of  from  5  to  10  years  for  the  protection 
of  American  commerce.  I  believe  that  there  can  be  a  system  devised, 
and  perhaps  the  brain  work  will  be  done  in  this  convention,  by  which 
those  vessels  can  be  acquired  by  those  who  furnish  the  capital  and  the 
facilities  and  also  have  the  brains  and  the  knowledge  to  run  them, 
so  that  those  ships  can  be  taken  over  by  purchase  of  those  lines,  and 
gradually,  without  friction  or  without  trouble,  the  United  States 
Government  can  be  relieved  of  the  responsibility  of  handling  the 
tonnage  of  the  country.  I  think  there  is  no  question  that  that  can  be 
worked  out,  and  of  course  we  can  not,  in  a  convention  of  this  kind,  go 
into  the  ways  and  methods  of  accomplishing  that  result. 

Therefore,  I  reach  this  conclusion  finally  on  that  point,  that  we  must 
retain  for  a  period  a  certain  amount  of  those  ships  under  Government 
title  and  that  those  ships  shall  then  be  given  over  to  private  operation 
with  the  right  to  take  those  ships  over  from  time  to  time  under  such 
plan  as  will  be  feasible  and  will  be  proper,  and  such  plan  should  be 
liberal. 

Do  you  mean  to  tell  me  there  is  anybody  in  this  country,  even  the 
farmer — when  this  Nation  has  spent  some  three  or  four  hundred 
million  dollars  to  acquire  this  fleet — who  will  take  any  exception  to 
the  expenditure  of  one  or  two  hundred  million  dollars  to  put  on  the 
ocean  the  flag  that  we  haven't  seen  there  for  45  or  50  years  ?  I  don't 
believe  so.  I  am  too  good  an  American  citizen  to  be  in  any  way 
upset  by  a  statement  that  any  man  may  make  to  the  contrary. 

When  we  come  to  the  large  number  of  vessels  which  has  been  re- 
ferred to  that  will  have  to  be  sold  to  private  owners  by  reason  of  the 
fact  that  they  may  not  be  the  type  of  tonnage  and  as  speedy  as  will 
go  on  the  regular  lines,  then,  of  course,  we  will  have  to  adopt  an- 
other system  so  that  the  difference  of  the  cost  of  operation  can  be 
maintained.  I  asked  Mr.  Franklin  a  few  minutes  ago  whether  he 
thought  that  Xo.  6  clause  in  the  statement  which  he  read  would  cover 
that  point.  If  it  does,  gentlemen,  I  should  say  we  all  would  be  will- 
ing to  adopt  that  and  that  the  taxation  for,  say,  a  certain  period  of 
years  would  be  eliminated  so  far  as  those  ships  are  concerned.  If 
that  is  sufficient,  let  us  subscribe  to  that.  If  that  is  not,  let  us  give 
them  something  that  is  sufficient.  Those  ships  must  run ;  they  must 
be  handled  by  private  owners  and  seek  trade  all  over  the  world. 
That  is  another  matter  of  detail  which  we  can  leave  to  the  Shipping 
Board  to  investigate  and  also  other  points  of  interest  which  will 
bring  about  those  results. 


124 

There  is  one  thing  that  I  want  to  mention,  however,  that  was  not 
touched  on  this  morning.     That  is  the  question  of  the  division  of  the 
allocation  of  these  ships  to  the  different  ports  of  the  country.     Now, 
that  is  something  which  you  have  got  to  do  very  carefully  and  very 
judiciously.     If  you  try  to  change  the  trade  routes  of  goods  going  to 
the  seaports  you  enter  into  something  that  is  a  dangerous  proposi- 
tion, because  you  can  not  change  those  trade  routes.    If  goods  natur- 
ally flow  down  the  Mississippi  River  to  New  Orleans,  I  take  no  excep- 
tion to  have  the  goods  shipped  from  New  Orleans.     Or,  if  they  flow 
in  any  other  direction,  let  them  be  shipped  from  there.     But  just  so 
sure  as  you  try  to  divide  the  allocation  of  the  different  lines  to  parts 
of  the  country  which  are  not  properly  equipped  to  carry  the  cargoes, 
gentlemen,  you  won't  have  the  cargoes,  and  the  result  will  be  that 
the  goods  will  flow  the  same  way  as  they  do  now.     Those  points  on 
the  seaboard  which  are  the  natural  flow  of  the  goods,  and  they  there- 
fore will  be  carried  by  alien  lines.    So  that  you  have  got  to  be  very 
careful  about  that.     Further,  I  do  not  think  it  is  necessary  to  allocate 
these  ships  even  in  the  way  of  lines  to  all  the  ports  of  this  country. 
It  is  not  good  business.     We  can  have  some  coastal  interchange  of 
those  lines.     For  instance,  let  a  boat  start  at  Boston  that  is  going  to 
load  to  Buenos  Aires  or  Montevideo,  and  stop  at  New   York  for 
further  cargoes.     What  is  the  reason  why  she  doesn't?     If  she  has 
cargo  there,  put  it  on  in  Boston  and  let  her  come  to  New  York.     It  is 
a  very  feasible  proposition,  so  don't  let  us  have  any  jealous  ideas 
about  this  matter.     Let  us  sink  all  these  ideas  of  sections  and  unite 
on  some  plan  which  will  give  us  what  we  desire,  and  it  is  perfectly 
feasible  and  perfectly  possible  to  arrive  at  these  results  if  we  will  all 
be  level  minded  in  this  matter.     When  it  comes  to  the  question  of 
regulation  of  rates,  I  believe  again  that  my  friend  Mr.  Franklin  is 
right.     I  don't  think  we  ought  to  fix  on  these  lines  maximum  or  mini- 
mum rates.     I  think,  however,  where  the  Government  has  any  control 
at  all  by  reason  of  ownership,  that  they  should  keep  their  hands 
entirely  off  operation  and  let  the  operators  have  an  absolutely  free 
hand,  simply  retaining  the  right  under  some  cooperation  with  that 
line  to  step  in  and  perhaps  not  control,  but  perhaps  to  supervise  rates 
when  it  may  be  necessary  for  the  protection  of  our  commerce — not 
otherwise. 

There  is  one  danger  I  would  like  to  point  out  in  reference  to  that 
paper  and  that  was  the  danger  of  allocating  ships  in  accordance 
with  the  purchase  of  ships.  That  is,  if  one  large  and  powerful  com- 
pany with  an  immense  amount  of  capital  should  buy  50  or  60  ships, 
I  don't  think  they  should  be  allocated  any  number  of  ships ;  I  think 
that  ought  to  be  avoided  as  it  might  be  a  dangerous  thing.  That  is 
only  a  detail,  however,  which  I  mention  simply  because  it  attracted 
my  attention  when  the  plan  was  ready.  There  is  the  question  of 
whether  these  ships  can  make  money  or  whether  they  can  not.  Per- 
sonally, I  see  no  reason  why  these  various  lines  established  under  any 
plans  are  not  able  to  make  money.  Whether  that  money  will  be  made 
by  the  Government  or  whether  it  will  be  made  by  private  individuals 
is  a  matter  of  detail  under  the  arrangements  which  are  entered  into. 
The  only  thing  which  prevents  our  ships  from  making  money  is 
the  return  voyage.  On  the  outward  voyage  we  all  know  they  can 
make  money.  We  all  know,  gentlemen,  it  is  a  well-known  fact,  that 


125 

for  30  years  our  commerce  has  not  been  carried  by  alieu  snipping  at 
a  loss.  We  all  know  it  has  been  carried  at  a  very  handsome  profit, 
and  therefore  by  reason  of  the  fact  that  those  were  alien  ships  largely 
they  have  their  other  routes,  which  of  course  they  could  combine  and 
didn't  lose.  Whereas  in  loading  American  ships  we  have  to  face 
that  contingency.  It  will  be  the  effort  to  get  those  ships  back  be- 
cause we  haven't  the  back  cargoes  and  we  have  to  compete  with  the 
world  to  get  them  and  the  world  is  very  much  better  equipped  to 
hold  those  cargoes  than  we  are  by  reason  of  the  fact  that  they  have 
been  in  those  straits  many  years  and  they  are  now  through  their 
ramifications,  the  controllers  of  the  homeward  freight.  We  must  not 
fail  to  look  at  that  point.  Therefore  we  must  guide  our  ships  when 
they  arrange  these  lines  with  all  the  more  care,  all  the  more  liberality, 
because  they  have  to  face  that  condition  which  it  will  take  a  number 
of  years  to  build  up ;  that  is  the  returning  cargo.  I  might  go  on  at 
considerable  length  on  these  various  subjects,  but  I  think  we  have 
now  got  right  down  to  those  questions,  and  it  is  for  Mr.  Hurley  and 
his  committee  or  some  other  authorized  committee  to  decide  whether 
those  ships  shall  be  owned  and  operated  by  the  Government  for  a 
series  of  years  or  whether  they  shall  be  held  by  the  Government  for  a 
reasonable  period  and  then  under  private  operation  shall  be  grad- 
ually absorbed ;  and  under  those  plans  I  am  unquestionably  in  favor 
of  a  reasonable  retention  of  title  and  then  have  the  ships  eliminated 
as  fast  as  possible  and  taken  out  of  Government  hands  so  at  the  end 
of  10  years  or  whatever  period  may  be  decided  upon  we  will  have 
the  commerce  we  need  and  I  believe  that  with  any  reasonable  con- 
clusion by  Congress  we  will  at  last  reach  a  result  which  most  of  us 
had  almost  lost  hope  to  see,  the  flag  again  on  the  ocean.  [Applause.] 

Mr.  ALBRECHT.  May  I  ask  Mr.  Douglas  a  question;  I  would  like 
to  ask  whether  he,  in  referring  to  Mr.  Franklin's  suggestion  of  the 
interest  to  be  taken  by  the  various  sections  of  the  country  in  the  pur- 
chase of  these  ships,  has  thought  that  the  ships  which  are  brought 
with  the  moneys,  whether  it  be  of  New  York,  Boston,  Philadelphia, 
New  Orleans,  etc.,  will  only  run  from  those  ports.  My  thought  has 
always  been  that  regardless  of  where  the  ships  were  owned  they  were 
to  sail  from  those  ports  where  there  were  cargoes. 

Mr.  DOUGLAS.  I  had  no  intention  of  giving  a  wrong  impression. 
Where  you  start  a  line  if  it  is  Government  owned,  it  must  be  char- 
tered where  the  Government  determines.  On  any  other  plan,  of 
course,  those  ships  are  free  to  come  and  go  anywhere  they  please  on 
the  ocean. 

Mr.  HURLEY.  Mr.  W.  M.  Jardine,  president  of  the  Agricultural 
College  of  Kansas: 

Mr.  JARDINE.  Mr.  Chairman,  I  am  here  without  instructions  from 
farmers  or  any  other  organization  of  my  State.  I  am  very  glad  to 
accept  the  invitation  to  come  down  here  and  get  some  information  on 
a  question  that  is  very  vital  to  Kansas  farmers  and  farmers  wherever 
they  may  be  located  in  this  country. 

During  the  war  we  have  increased  production  in  this  country  about 
20  per  cent  with  considerably  fewer  men  on  the  farms,  and  we  have 
shipped  abroad  millions  of  tons  of  animal  products  and  cereal  prod- 
ucts, products  of  the  farmers  generally.  We  are  probably  going  to 
have  an  open  market,  a  big  demand,  for  the  next  year  or  so  for  about 


126 

all  we  can  produce  with  the  present  man  power  on  the  farms.  The 
Government  has  one  branch  spending  a  lot  of  money  wTith  thousands 
of  men  employed  in  increasing  agricultural  production.  It  has  an- 
other branch  that  is  framing  legislation  which  will  likely  pass  very 
soon  for  the  establishment  or  sending  to  the  land  more  tillers  of 
the  soil.  The  price  of  farm  products  is  going  to  be  determined  ac- 
cording to  the  law  of  supply  and  demand.  I  think  we  have  reached 
the  point  in  our  thinking  now  where  we  must  regard  ourselves  no 
longer  isolated  as  farmers  as  well  as  business  men,  and  that  we  must 
look  to  the  world  at  large  for  our  markets.  The  question,  then,  is 
how  is  the  best  way,  what  is  the  best  plan  of  opening  up  new  mar- 
kets and  from  the  farmers'  point  of  view  of  opening  up  new  markets 
in  particular  for  the  things  we  have  to  sell. 

]\ow,  we  have  three  or  four  big  things  to  sell.  In  Kansas  there 
are  about  175,000,000  bushels  of  wheat  to  sell  this  year.  We  prob- 
ably harvested  200,000,000  of  wheat  and  will  "consume  about 
25,000,000  for  ourselves  and  for  seed.  We  are  large  producers  of 
meat  products,  whether  they  be  cows,  sheep,  etc.:  we  are  therefore 
interested  in  particularly  opening  up  markets  for  our  animal  pro- 
duction. We  are  far  more  interested  in  opening  up  markets  for  our 
animal  products  than  we  are  for  our  cereal  products.  In  my  judg- 
ment we  are  far  more  interested,  all  of  us,  as  Americans  in  opening 
up  markets  for  our  manufactured  products  and  our  animal  products 
than  wre  are  in  opening  up  markets  for  raw  products.  If  we  can  de- 
velop a  large  export  freight  trade  or  a  large  market  for  live-stock 
products  we  will  be  able  then  to  double  the  capitalization  in  this 
country.  While  a  man  may  not  be  able  to  get  more  than  80  acres  of 
land  he  may  put  another  80  in  capital  and  have  that  much  more 
capital  to  work  on,  and  he  may  be  able  to  maintain  permanent  agri- 
culture in  this  country  which  ought  to  be  considered  in  any  far- 
reaching  plan  that  might  be  considered  by  the  Shipping  Board  or 
any  other  governmental  agency.  We  ought  to  stimulate  animal  pro- 
duction in  America,  and  we  are  all  over  the  country  now,  but  where 
are  we  going  to  sell  it  after  the  European  countries  return  to  normal  ? 
We  weren't  doing  it  before  we  entered  into  the  war.  How  are  we 
going  to  continue  to  keep  open  markets  for  our  surplus  materials  that 
are  now  open  because  of  the  chaotic  position  which  Europe  finds 
herself  in  ? 

Eight  here  I  would  like  to  say  that  what  views  I  am  expressing 
here  are  views  that  I  hold  as  a  result  of  my  contact  with  the 
farmers  of  that  section  of  the  country.  The  agricultural  college  of 
Kansas  lives  very  close  to  the  farmers  of  that  State.  It  is  probably 
the  closest  of  any  agricultural  college  of  America.  We  are  right 
close  to  the  grass  roots.  We  had  500  live-stock  men  in  there  a 
week  ago.  We  are  close  together.  While  I  haven't  the  authority 
to  speak  for  them  in  general,  I  believe  I  am  voicing  the  general 
opinion  which  they  feel  at  this  time.  It  isn't-  clear  in  my  mind  what 
plan  would  be  the  best  or  most  practicable  to  open  up  new  fields  for 
our  products.  It  looks  as  if  we  must  do  some  pioneering,  and,  as  I 
understand  it,  pioneering  is  expensive.  It  is  going  to  be  carried  on 
the  shoulders  of  private  concerns  to  open  up  new  fields.  They  cer- 
tainly can  not  expect  to  make  much  out  of  those  new  fields  within  the 
next  few  years,  but  any  plan  adopted  should  be  far-sighted  enough 


127 

to  look  into  the  future  for  not  5  years,  but  10,  15,  or  20  years.  We 
must  go  out  in  the  sections  we  haven't  traded  in  in  the  past  and  par- 
ticularly into  the  sections  that  are  not  producing  the  goods  we  offer 
for  sale,  but  are  producing  that  which  we  can  readily  produce  here 
and  not  he  in  competition.  In  other  words,  if  we  can  develop  our 
trade  in  the  Argentine  we  are  going  to  have  to  bring  back  meat 
products  and  cereals  probably,  or  come  back  empty.  Our  farmers  are 
afraid  of  that.  The  tropical  countries  generally  are  using  products 
that  Avoirt  be  in  competition.  On  the  other  hand,  we  could  develop  a 
market  for  many  of  the  products  that  we  grow  in  this  country  and 
create  a  larger  market  for  those  products. 

Now,  if  these  ships  are  turned  over  to  private  ownership,  can't  we 
expect  them  to  open  up  these  new  lines  of  trade  to  expand  our  business, 
or  is  there  a  relationship  that  might  be  worked  out  between  Federal 
authority  and  the  private  owners  whereby  that  could  be  accomplished 
to  a  better  end  ?  I  believe  if  our  farmers  were  to  vote  on  this  question 
they  would  vote  almost  unanimously  that  the  Government  shouldn't 
operate  the  merchant  marine  and  the  railroads,  and  I  am  not  so  sure 
that  they  would  vote  to  turn  them  over  without  any  strings  on  them  or 
without  anything  to  say  for  the  time  being  at  least,  until  we  know 
where  we  are.  I  am  pretty  sure  they  would  vote  against  that  propo- 
sition. I  am  confident  they  want  the  merchant  marine  and  railroads 
to  be  handled  by  private  individuals.  I  am  opposed  to  Government 
operation  of  any  of  the  railroads  or  of  our  merchant  marine,  for  the 
reason  that  it  stifles  initiative.  It  is  the  initiative,  the  inventive  genius 
of  America,  that  has  put  us  ahead  of  all  others  with  whom  we  are  asso- 
ciated in  this  war.  You  put  a  man  under  civil  service — I  have  been 
there — and  you  take  from  him  all  the  inspiration  to  develop  the  ag- 
gressive and  promote  our  industries.  For  no  other  reason  than  that  I 
am  for  private  ownership  and  private  operation.  Don't  get  this  mixed 
up  with  private  ownership  and  private  operation.  I  don't  know  how 
far  to  go  before  we  turn  them  over.  I  am  not  an  expert.  We  have 
our  experts  in  those  lines,  and  we  have  confidence  in  them.  This 
conference  is  fine  for  us  to  come  here  and  express  our  thoughts  with 
the  idea  that  we  are  all  honest  in  this  conference.  As  one  man  said, 
"  I  hate  that  man."  His  companion  said,  "  How  long  have  you  known 
him  " ;  he  says,  "  Oh,  hell,  I  don't  know  him  or  I  couldn't  hate  him." 
If  we  get  better  acquainted  with  the  farmers — we  are  all  made  up  of 
the  same  kind  of  flesh  and  blood ;  we  are  all  human.  We  are  all  a  little 
selfish.  We  are  all  for  ourselves  first,  and  that  is  right.  Naturally, 
the  farmers  to-day  are  asking  themselves  these  two  questions :  What 
are  we  going  to  bring  back  in  these  ships  in  these  bottoms?  If  we 
maintain  to-day  a  merchant  marine,  how  much  is  it  going  to  cost  us  ? 
I  am  one  of  those  who  believe  we  have  to  subsidize  this  industry  if  we 
are  going  to  be  able  to  compete  with  countries  which  have  cheaper 
labor.  If  we  are  going  to  man  our  ships  in  a  measure  with  American 
boys,  I  hope  we  do  in  a  large  sense.  We  want  them  to  be  paid  a  good 
substantial  wage ;  if  we  want  to  do  that  we  have  got  to  subsidize,  be- 
cause we  are  competing  otherwise  with  unequal  conditions.  The 
Welshman,  the  Scotchman,  and  the  Irishman  don't  have  a  big  coun- 
try to  develop,  to  open  up  wider  opportunities  for  young  men,  and 
they  need  the  merchant  marine  to  furnish  emplojmient  for  those  men, 
and  we  are  going  to  be  in  competition.  The  Asiatic  people  again — of 


128 

course,  their  standards  of  living  are  below  ours.  If  we  are  going  to 
compete  with  those  people  it  looks  to  me  as  if  we  must  pay  the  bill 
and  protect  them  in  some  sense.  I  believe  if  the  farmers  of  the  country 
are  opposed  to  this  it  is  because  largely  they  haven't  the  facts.  You 
must  remember  it  takes  time  to  get  facts  out  into  the  country,  and  you 
want  to  remember  they  are  more  or  less  isolated.  We  had  our  experi- 
ence in  this  war.  It  took  a  little  longer  to  arouse  enthusiasm  out  in 
Kansas  than  in  the  Atlantic  coast,  because  the  information  was  later 
in  getting  to  us.  But  as  soon  as  the  information  got  there,  they  were 
going  strong  right  to  the  finish.  [Applause.] 

The  American  farmer,  wherever  he  is,  is  a  pretty  good  business 
man,  square,  fair  thinking,  and  fair  in  what  he  wants,  fair  acting, 
but  we  must  give  him  this  information.  He  is  without  the  informa- 
tion, gentlemen ;  it  is  not  being  talked  out  in  our  country,  and  we  want 
to  be  sure  that  the  facts  are  presented  to  him  absolutely  and  not  given 
out  by  some  one  who  is  hysterical.  This  is  a  time  for  straight  think- 
ing and  not  stampeding.  You  get  the  facts  across  to  the  farmer  and 
show  him  both  sides  of  this  question  and  show  him  that  we  must 
develop  our  trade  and  our  manufactories  to  run  at  full  speed  and 
more  of  them,  which  will  give  labor  more  wages,  that  in  turn  will 
demand  more  agricultural  products,  and  then  if  we  can  open  up  these 
new  fields  and  trades  we  will  be  able  to  put  more  boys  on  the  land 
and  we  will  be  able  to  increase  our  agricultural  production.  But 
together  with  a  policy  of  trying  to  put  more  men  back  on  the  land 
to  increase  our  agricultural  output  and  then  a  short-sighted  policy  in 
opening  up  new  fields  of  trade,  it  will  be  bad  for  agriculture  inter- 
ests. For,  unless  we  do  open  new  fields  for  our  products,  we  don't 
want  any  more  men  on  the  land.  We  have  shown  what  we  can  do  with 
a  small  population  on  the  land  these  last  two  years.  We  have  shown 
we  can  increase  the  production  20  per  cent,  and  now  we  are  coming 
back  to  normal.  Obviously,  we  must  have  outlets  for  these  products. 
We  simply  must  have  them,  and  every  American,  from  a  sentimental 
point  of  view,  wants, to  have  our  products  carried  in  American  bot- 
toms. We  are  asking  questions,  "  How  can  we  do  it  ? "  and  "  How 
much  are  we  going  to  pay  for  it?"  I,  for  one,  believe  we  must  pay, 
and  personally  I  am  quite  willing  to  assume  my  portion  of  it.  I 
don't  know  what  our  Kansas  farmers  want  to  do  about  this  matter, 
but  I  believe  if  they  have  all  the  facts  they  will  be  liberal  minded  in 
their  decisions.  They  are  pretty  fair-minded  people,  and  I  hope  you 
will  try  to  get  the  facts  before  them.  [Applause.] 

Mr.  HURLEY.  Mr.  John  B.  Smull,  representing  the  New  York 
Chamber  of  Commerce  of  New  York.  Mr.  Smull,  we  would  like  to 
hear  from  you. 

Mr.  SMULL.  Mr.  Hurley,  Mr.  Ring,  and  I  were  sent  to  this  confer- 
ence by  the  New  York  Chamber  of  Commerce.  Mr.  Ring  presented 
to  the  conference  yesterday  afternoon  a  resolution  which  the  chamber 
adopted  in  January.  Neither  Mr.  Ring  nor  myself  have  authority 
from  the  chamber  other  than  that  contained  in  those  resolutions. 

There  are  a  few  things  I  would  like  to  say  with  regard  to  some  of 
the  recommendations  proposed  by  the  advocates  of  Government 
ownership.  If  the  Shipping  Board  steamers  remain  in  the  custody 
of  the  United  States  Shipping  Board,  they  are  United  States  Govern- 
ment property,  and  will  be  treated  as  such  in  all  ports  of  the  world. 


129 

Being  United  States  Government-owned  property,  they  will  not  be 
subjected  to  the  laws  and  rules  of  foreign  lands,  which  will  very 
largely  interfere  with  the  chartering  of  these  vessels  with  full  car- 
goes of  commodities  from  this  country  to  Europe.  Being  Govern- 
ment-owned, no  company  or  foreign  citizen  can  claim  for  damage  or 
short  deliveries  of  cargo.  They  can  claim,  but  they  can  not  enforce 
their  claims  as  the  vessels  will' not. be  subjected  to  any  libeling  laws 
in  those  countries.  A  vessel  carrying  a  cargo  of  grain  to  New  York 
or  Philadelphia  from  Europe,  arriving  there  in  a  damaged  condi- 
tion, the  consignee  of  that  cargo  can  not  libel  the  vessel,  as  it  would 
be  the  property  of  the  United  States  Government.  A  foreign  im- 
porter in  chartering,  if  given  the  choice  between  a  United  States  Gov- 
ernment boat  or  a  boat  owned  by  a  private  individual,  will  take  the 
privately  owned  boat  every  time.  That  was  very  forcibly  brought 
out  during  the  war  by  the  sending  of  this  country  of  two  transports 
owned  by  the  Peruvian  Government.  There  were  also  twro  transports 
owned  by  the  Argentine  Government.  One  of  the  Argentine  vessels 
did  not  comply  with  the  regulations  of  the  Shipping  Board,  and  we 
endeavored  to  force  that  boat  to  do  as  a  privately  owned  boat  would 
have  done,  and  it  was  found  the  United  States  Government  could  not 
do  anything  with  it.  She  was  owned  by  the  Argentine  Government 
and  was  free  from  libel.  We  could  not  enforce  our  claim  for  nonful- 
fillment of  the  charter.  That  point,  I  think,  should  be  very  carefully 
considered  when  discussing  the  merits  of  Government  ownership  or 
private  ownership. 

It  has  been  stated  here  that  the  shipping  business  during  the  war 
was  very  well  run,  and  the  gentlemen  saw  no  reason  why  the  Govern- 
ment could  not  go  ahead  to  run  the  boats  of  the  Government  after 
the  war  as  well  as  a  private  corporation  could.  I  want  to  say  that 
Mr.  Hurley,  during  the  war,  surrounded  himself  with  the  best  steam- 
ship men  in  the  country.  There  was  no  prominent  steamship  man 
that  did  not  give  up  his  business  and  sacrifice  his  personal  business 
for  the  sake  of  running  the  Shipping  Board  steamers  as  he  would 
have  run  them  for  himself.  Now,  for  the  Government  to  continue  to 
run  steamers,  it  could  not  expect  to  get  these  same  men  to  give  up 
their  own  business  and  remain  in  the  Government  employment.  The 
majority  of  them  do  not  care  for  Government  employment.  The 
young  men  growing  up  in  the  business  do  not  want  to  go  into  Gov- 
ernment employment ;  they  want  to  get  into  some  private  corporation 
where  they  can  get  ahead ;  where  their  initiative  and  knowledge  will 
get  them  ahead,  and  where  they  can  make  more  money.  The  Board 
has  endeavored  to  get  more  experienced  men  since  the  armistice  but 
found  it  extremely  difficult  to  increase  their  staff,  or  to  get  men  with 
any  experience  in  the  steamship  business  to  enter  the  Shipping 
Board. 

Now,  there  have  been  some  gentlemen  who  advocated  putting  off 
the  selling  of  these  vessels  until  some  future  time,  not  to  sell  them 
now ;  just  let  the  Government  run  them  until  the  markets  are  normal. 
The  Government  would  probably  be  criticized  if  it  sold  the  boats  to- 
day at  $120  a  ton,  as  it  would  show  an  enormous  loss  over  the  cost 
of  construction,  but  if  you  delay  the  sale  of  these  vessels  until  the 
markets  are  normal,  the  market  for  tonnage  will  go  back  to  where  it 
was  before  the  war,  to  $40  or  $50  a  ton,  and  you  will  then  have  an 

121034—19 9 


130 

additional  $70  or  $80  loss  over  what  you  could  get  to-day.  Then, 
the  advocates  of  Government  ownership  must  bear  in  mind  that  there 
is  a  possibility  of  the  shipping  industry  being  in  the  same  condition 
as  it  was  seven  or  eight  years  ago.  I  would  not  like  to  say  how  many 
steamers  were  laid  up  all  over  the  world;  but  I  presume  if  I  said 
there  were  7,500  steamers,  I  would  not  be  far  wrong.  I  know  that 
there  were  over  400  steamers  laid  up  in  the  River  Thames,  and  some 
were  in  there  for  12  months,  owing  to  lack  of  cargo,  and  the  low  rate 
of  freight  which  would  not  allow  the  owners  to  pay  their  running 
charges,  insurance,  and  labor. 

There  has  also  been  some  argument  that  the  Railroad  Admini^ni- 
tion  has  been  well  run,  and  there  is  no  reason  why  the  Government 
could  not  run  the  steamship  business  as  well.  A  man  who  makes  the 
claim  that  the  railroads  could  be  run  in  the  same  profitable  way  by 
the  Government,  and  the  steamship  business  could  be  run  in  the  same 
manner,  does  not  understand  the  steamship  business.  It  is  without  a 
doubt  the  most  intricate  business  in  the  world.  Every  day  things 
come  up  where  decisions  have  to  be  made  immediately.  I  have  been 
in  the  business  for  25  years  and  daily  questions  come  up  that  have  no 
precedent.  You  have  to  make  up  your  mind  from  your  experience  in 
the  business,  and  it  is  only  a  knowledge  of  the  trade  that  allows  you 
to  come  to  a  conclusion  that  will  work  out  profitably  for  the  steamship 
owner.  Some  men  claimed  yesterday  that  they  saw  no  reason  why 
the  Government  could  not  run  the  steamship  business  as  well  as  a 
private  individual  could,  but  when  you  consider  that  the  board  in  a 
very  little  while  will  have  over  2,000  steamers  they  would  have  to 
operate  through  many  departments,  and  it  is  easily  conceivable  where 
they  could  not  run  it  as  well  as  a  private  company.  A  private  com- 
pany with  40  or  50  boats  can  have  one  man  who  can  keep  track  of 
them ;  the  allocation  of  them  and  the  discharging  of  them,  but  when 
it  comes  to  2,000  boats,  you  have  to  have,  as  you  have  in  the  Shipping 
Board  now,  four  large  departments  to  cover  the  allocation,  the 
chartering,  the  loading  and  discharging,  and  a  certain  trade  is  offered 
to  the  board ;  there  are  three  or  four  departments  which  must  be  con- 
sulted before  they  know  what  ought  to  be  done  and  what  price  to 
make,  and  instead  of  deciding  the  question  as  a  private  owner  would 
decide  it,  and  have  to  decide  it,  or  lose  the  business  to  a  foreigner, 
and  decide  it  in  a  half  hour ;  it  will  take  the  board  three  or  four  days 
to  decide  what  to  do  with  that  ship  and  what  rates  to  take.  [Ap- 
plause.] 

Mr.  HURLEY.  Mr.  A.  N.  Lumas,  of  the  National  Grange. 
Mr.  LUMAS.  Mr.  Chairman  and  gentlemen,  after  the  statement 
here  yesterday  by  Mr.  Atkinson,  the  Washington  representative  of 
the  National  Grange,  it  is  useless  for  me  to  say  anything  on  this 
subject,  excepting  to  emphasize,  perhaps,  for  the  benefit  of  those 
here  to-day  who  were  not  here  yesterday,  the  organization  which  we 
represent.  The  National  Grange  is  a  53-year-old  organization  of 
producing  farmers  with  600,000  paid  members,  easily  representing 
twice  that  number  of  producing  farmers.  It  is  an  organization 
which  has  delegated  representation  from  subordinate  divisions  to 
county  granges,  to  State  granges,  to  National  granges,  and,  conse- 
quently, what  Mr.  Atkinson  said  here  yesterday  is  not  a  conclusion 
which  has  been  arrived  at  in  the  frequently  resorted  to  methods  of 
questionnaires  or  anything  of  that  sort,  but  represents  the  policy 


131 

and  precedent  of  years  of  experience  and  study  of  this  delegated 
representation,  and  consequently  we  feel  that  we  speak,  although 
without  definite  instructions  on  this  particular  subject,  for  a  very 
large  majority — I  can  emphasize  that  still  more  strongly;  a  large 
majority  of  the  600,000  membership  of  this  order. 

When  we  say,  and  when  I  repeat  what  Mr.  Atkinson  said  yester- 
day, that  there  are  some  definite  principles  in  this  proposition  on 
which  the  Grange  stands;  that  we  do  not  favor  and  do  not  stand 
for  a  Government  ownership  or  operation  of  the  merchant  marine. 
We  do  not  stand  for  a  subsidy  in  any  form.  Further  than  that,  we 
hope  we  can  go  as  far  as  any  man  here  in  the  indorsement  and  the 
effort  to  carry  out  a  policy  which  will  give  this  Nation  a  merchant 
marine  of  the  size  and  character  to  which  it  is  entitled.  I  feel  that 
it  is  an  honor  to  indorse  the  position  which  has  been  taken  here  by 
President  Sheldon,  of  the  Kansas  City  Agricultural  College.  The 
details  as  to  the  trade  routes  to  be  developed,  the  amount  of  Govern- 
ment assistance  to  be  furnished  and  the  other  matters  of  that  sort 
are  things  in  which  we  can  agree  and  go  as  far  as  it  is  possible  along 
those  lines. 

I  have  only  one  other  thought  which  I  might  add  here.  I  do  not 
believe  that  the  American  farmer  is  afraid  that  the  brains  and  the 
initiative  and  the  energy  of  America  will  fall  down  in  this  problem. 
I  do  believe  that  the  American  farmer  is  afraid  his  business  will  be 
exploited  in  the  long  run  in  this  proposition  at  the  expense  of  other 
American  businesses.  The  American  farmer  has  a  long  recollection, 
and  he  remembers  that  this  has  happened,  in  numerous  instances  in  the 
past  in  the  development  of  big  American  businesses;  and,  conse- 
quently, we  add  to  the  other  things  we  have  said  on  this  subject,  the 
statement  that  we  believe  in  as  strong  a  governmental  control  of  the 
operation  of  the  merchant  marine  as  it  is  possible  to  insist  upon.  In 
conclusion,  I  want  to  say  that  the  American  farmer,  through  this 
organization  and  representation  by  us,  I  feel  sure,  will  take  the  posi- 
tion that  it  was  not  only  a  hearing,  which  has  been  very  graciously 
given  at  this  conference,  but  in  the  future  conferences  and  in  the  fu- 
ture determinations  which  are  made  of  this  problem.  [Applause.] 

Mr.  HURLEY.  Are  there  any  other  gentlemen  here  representing  farm 
organizations?  I  have  not  all  the  names,  but  I  would  like  to  hear 
from  them.  They  have  taken  so  much  time  and  trouble  to  get  here 
that  I  am  particularly  anxious  that  they  should  be  heard. 

Mr.  F.  E.  KOBERTSON,  of  the  State  College  of  Agriculture,  Ithaca, 
N".  Y.  Mr.  Chairman.  I  came  here  entirely  uninstructed,  with  the  re- 
quest to  bring  back  a  report  to  the  Farm  Bureau  Organization,  rep- 
resenting 65,000  farmers,  and  I  agree  with  some  of  the  other  men 
here  who  have  mentioned  the  fact  that  the  farmers  do  not  understand 
all  that  is  going  on  in  connection  with  the  development  of  the  mer- 
chant marine  in  this  country  and  they  do  want  this  information,  and 
they  want  it  straight,  and  I  should  say  that  it  should  be  the  duty  of 
this  body  to  see  to  it  that  the  people  who  live  on  the  farm  in  the  coun- 
try get  this  thing  straight,  so  that  they  will  understand  it. 

'Mr.  HURLEY.  Mr.  Henry  Sterling,  representing  the  American 
Federation  of  Labor. 

Mr.  STERLING.  Mr.  Chairman,  I  desire  to  thank  you  for  the  privi- 
lege, and  through  your  kindness  and  courtesy  I  have  enjoyed  listen- 
ing to  the  discussions  on  this  matter.  I  felt  yesterday  morning  when 


132 

you  gave  your  instruction,  Mr.  Chairman,  that  you  gave  us  the  key 
word  of  the  whole  subject,  and  that  one  word  was  "  efficiency."  It 
was  a  matter  of  very  great  regret  to  me  that  we  seemed  to  drift  away 
from  that  word.  The  question  before  the  house,  it  seemed  to  me,  was 
which  of  the  two  systems — private  or  Government  owned  operation — 
would  be  more  efficient.  It  has  not  been  discussed  from  that  stand- 
point very  much. 

We  have  had  numerous  declarations  that  Government  operation 
would  be  less  efficient,  but  my  point  of  regret  was  that  almost  imme- 
diately we  drifted  away,  and  all  yesterday  forenoon  we  discussed  the 
matter  of  private  profit  for  the  operation  of  a  merchant  marine  and 
it  was  insisted  upon  that  there  must  be  a  margin  of  profit  for  those 
who  entered  the  business,  and  that  the  Government  -  owned  ships 
would  be  inefficient ;  and  for  that  reason  we  must  have  private  owner- 
ship and  the  Government  must  see  that  they  were  put  under  such 
circumstances  as  would  give  them  a  profit. 

Now,  Mr.  Chairman,  this  word  profit  is  an  unfortunate  word  to 
use.  It  carries  two  distinct  meanings ;  one  of  which  is  entirely  com- 
mendable, and  the  other  may  or  may  not  be  commendable.  If  any 
one  of  these  gentlemen  engaged  in  a  business  enterprise  during  the 
coming  year  and  attended  faithfully  to  its  details,  and  found  at  the 
end  of  the  year  that  the  income  exceeded  the  output  by  about  $1,000, 
there  would  be  some  ground  for  saying  that  it  would  be  profit;  but 
it  is  not.  It  would  simply  be  actual  pay  for  a  service  rendered  to 
the  community.  But  suppose  under  the  same  circumstances  he  made 
an  excessive  income  of  $50,000  over  the  output.  Then  there  would 
be  $40,000  or  $45,000  that  could  legitimately  be  called  profit;  and 
where  did  it  come  from  ?  It  anticipates  more  than  a  fair  return  for 
a  service  rendered  to  the  community;  and  where  did  it  come  from, 
and  how  is  he  entitled  to  it,  and  can  it  be  universal  ? 

It  was  stated  here,  and  it  has  run  through  all  the  discussions,  that 
there  must  be  a  private  profit.  Now,  must  there  be  a  private  profit  ? 
Can  there  be  a  private  profit?  There  are  about  forty  millions  of  us 
that  work  in  various  enterprises  in  the  United  States,  and  it  is  the 
usual  thing  that  not  1,000,000  of  us— less  than  1,000,000  of  us— ever 
received  a  dollar  of  private  profit,  and  the  profits  that  less  than  a 
million  of  us  received  can  not  have  come  from  any  other  source  but 
a  reduction  from  the  earnings  of  those  who  never  have  received  a 
dollar  of  private  profit ;  and  so  the  claim  that  was  made  yesterday, 
and  which  is  being  assumed  as  correct  to-day,  falls  of  its  own 
weight.  Such  a  thing  can  not  exist  in  so  far  as  we  are  all  concerned, 
and  if  it  exists  in  so  far  as  a  few  are  concerned,  then  we  have  a  vio- 
lation of  the  fundamental  principles  of  our  Government — "equal 
rights  for  all  and  special  privileges  for  none." 

The  word  "efficiency,"  Mr.  Chairman,  lends  itself  to  a  double 
meaning.  There  is  such  a  thing  as  efficiency  of  service  in  regard  to 
transportation;  promptness,  speed,  absolute  reliability,  and  all  that 
is  considered  the  essentials  of  efficient  service.  But,  most  of  us  use 
the  word  ordinarily — in  the  sense  that  we  are  getting  something  done 
cheaper  than  somebody  else  could,  and  one  of  the  speakers  yesterday 
illustrated  that  by  saying  that  no  good  business  man  ought  to  get^his 
profits  out  of  the  difference  between  his  operation  of  a  certain  project 
and  the  cost  for  the  Government  to  operate  that  same  project. 


133 

That  is  an  interesting  view,  too,  and  in  that  acceptation  it  is  a 
fact  that  private  enterprise  is  often  much  more  efficient  than  the 
Government. 

I  remember  the  case  of  a  large  city  in  Vermont  which  established 
its  own  printing  office  to  do  its  own  work.  It  bought  out  an  old  shop 
and  scrapped  all  the  stuff  and  furnished  it  anew  and  went  on  to  do  its 
own  printing — its  own  reports  and  everything  that  the  departments 
needed.  It  was  not  very  long  before  there  was  scandal  attached  to  it. 
It  was  plain  to  be  seen  graft  being  carried  on.  It  was  plain  to  be 
seen  there  was  a  certain  amount  of  inefficiency  and  a  certain  amount 
of  mismanagement,  and  an  investigation  was  ordered.  Several  of 
them  have  been  ordered  in  different  years  and  the  investigations 
turned  on  this  point :  Was  the  city  making  or  losing  by  doing  its  own 
printing?  And  each  time  the  investigation  showed  by  comparison  of 
class  prices  that  if  that  work  had  gone  to  a  private  contractor  it 
would  have  been  done  for  substantially  the  same  figure.  Sometimes 
the  investigation  showed  a  little  above  and  sometimes  a  little  below, 
but  it  was  essentially  the  same  figure.  The  city  was  neither  making 
nor  losing.  Now,  was  there  any  gain  to  anyone  on  that?  Perhaps 
not,  unless  you  consider  it  a  little  deeper. 

There  was  this  difference,  that  a  private  concern  would  certainly 
have  printed  that  stuff  cheaper  and  charged  the  city  about  the  same 
amount,  and  where  would  the  difference  have  gone  to  ?  It  would  have 
gone  into  the  hands  of  a  private  concern  for  a  limosine  or  a  trip  to 
Europe,  and  as  an  actual  fact  one  of  the  private  concerns  which  had 
been  doing  it  before  and  had  accumulated  quite  a  large  amount  of 
money  and  a  very  desirable  business — the  head  of  it  died  and  left  two 
sons  into  whose  hands  it  fell  and  they  scattered  it  in  riotous  living, 
and  it  was  only  a  few  years  when  the  shop  was  scrapped  entirely. 

Now,  that  is  one  difference  between  what  a  private  concern  and  the 
Government  can  do.  That  is  one  phase  of  the  disposal  of  that  subject. 

Another  phase  is  that  that  difference  in  cost  first  was  obtained  by 
driving  the  men  harder  and  paying  them  less.  As  to  whether  there 
were  better  methods  or  not  it  can  not  surely  be  said.  Certainly  the 
Government  printing  had  better  printing  machinery  and  better  facili- 
ties and  more  machinery  and  more  facilities.  It  is  fair  to  say  that 
private  OAvnership  and  management  and  driving  as  hard  as  possible 
would  have  done  that  work  for  less  money,  but  the  money  that  under 
the  private  management  went  to  the  one  individual  concern  to  waste, 
under  the  public  management  was  diffused  amongst  several  hundred 
laboring  people  and  went  to  their  families  for  better  food  and  better 
clothing  and  better  shelter  and  better  education.  Through  their  hands 
it  went  to  the  merchants  in  the  cities  and  the  manufacturers  in  the 
cities  and,  as  wages  always  do,  it  simply  fructified  to  a  certain  extent 
the  entire  industry  of  the  community.  Whether  that  is  the  desirable 
result  or  not  remains  to  be  seen.  Now,  Mr.  Chairman,  let  us  get  the 
facts  in  our  minds  that  we  are  here  discussing  the  problem  of  trans- 
portation. That  is  the  subject  we  have  before  us.  We  have  confined 
ourselves  to  one  feature  or  one  phase  of  that  subject  of  transportation, 
and  not  the  most  important  phase  at  that.  And  I  think  everyone 
here,  Mr.  Chairman,  will  agree  with  me  when  I  say  that  the  one 
essential  thing,  the  one  altogether  desirable  thing,  the  one  superla- 
tively needed  in  this  country  is  a  complete  unification  and  coordina- 


134 

tion  of  all  the  means  of  transportation,  whether  overseas,  whether 
coastal,  or  whether  inland  waterways  or  railroads — all  ways  should 
function  together  as  one  unit  and  one  branch  should  be  of  assistance 
and  coordinate  with  all  the  other  branches  just  the  same  as  the  right 
hand  coordinates,  assists,  and  cooperates  with  the  left. 

Now,  Mr.  Chairman,  is  it  possible  to  bring  that  desirable  result 
under  private  ownership  ?  If  it  is,  then  the  matter  of  private  owner- 
ship and  public  ownership  becomes  a  subject  for  discussion.  But  if 
it  is  not,  Mr.  Chairman,  and  your  board  is  hastily  or  otherwise  dis- 
posing of  the  overseas-marine  facilities  which  j  ou  have  created  before 
that  final  unification  and  coordination  of  all  the  means  of  transpor- 
tation takes  place,  or  before  the  Congress  of  the  United  States  de- 
termines that  it  shall  not  take  place,  then,  Mr.  Chairman,  you  are 
proceeding  faster  than  you  ought  to  proceed ;  faster  than  the  interest 
of  the  farmer ;  faster  than  the  interest  of  the  merchant  or  the  shipper 
or  any  individual  in  this  country  warrants  going. 

And  so  I  say,  Mr.  Chairman,  while  I  do  not  want  to  pronounce  judg- 
ment between  public  ownership  and  private  ownership  at  the  pres- 
ent time,  I  would  urge  that  the  Shipping  Board  retain  the  ships  it  has 
until  such  a  time  as  Congress  makes  a  final  conclusion  on  this  whole 
matter. 

Mr.  E.  L.  BOGERT,  representing  the  University  of  Illinois.  Mr. 
Chairman,  may  I  say  a  word  ? 

Mr.  HURLEY.  Certainly. 

Mr.  BOGERT.  I  would  not  venture  to  take  your  time  except  I  would 
like  to  amplify  slightly  some  of  the  remarks  of  the  last  speaker.  He 
got  down  to  fundamentals  on  conditions  and  definitions,  and,  with  his 
permission,  I  would  like  to  define  a  little  further  the  definition  of 
"  profits  "  of  which  he  spoke. 

Profits  are  not  necessarily  always  a  deduction  from  wages.  It  is 
true  that  sometimes  profits  are  profiteering  profits.  They  are  perhaps 
the  result  of  exploitation  of  the  workers.  We  have  illustrations  of 
that,  possibly,  in  the  sweat  of  industry.  But  profits  as  ordinarily 
defined  are  the  results — not  merely  the  wages  of  superintendents — 
they  are  the  result  of  a  better  and  a  more  efficient  organization  of  an 
industry,  so  that  that  industry  produces  not  merely  as  much  for  the 
wage  workers  as  it  would  with  a  less  efficient  manager  but  it  produces 
a  great  deal  more.  In  that  case  the  services  of  the  enterpriser,  or 
the  interpener,  or  whatever  name  you  give  him,  has  resulted  in  a 
larger  production  of  wealth  for  society  as  a  whole.  It  is  not,  there- 
fore, to  be  counted  as  a  deduction  of  potential  wages  which  might 
otherwise  have  gone  to  labor.  Labor  has  shared  equally  with  all 
society  and  with  the  men  who  conducted  the  enterprise. 

It  seems  to  me  that  it  is  essential  that  this  distinction  should  be 
made  clear,  because  it  has  a  very  definite  bearing  on  the  very  problems 
which  the  last  speaker  brought  up,  the  question  of  the  desirability  of 
public  ownership  versus  private  ownership,  not  only  ownership  but 
management  and  operation.  And  while  the  profits  in  that  sense  may 
be  a  thoroughly  just  reward,  it  may  be  also  the  necessary  inducement 
to  bring  out  that  high  order  of  efficiency  of  enterprise,  of  initiative, 
which  shall  give  us  the  best  service  possible. 

Mr.  HuRLEr.  We  would  like  to  hear  from  Mr.  M.  H.  Koyston,  rep- 
resenting the  Galveston  Chamber  of  Commerce,  Galveston,  Tex. 


135 

Mr.  M.  H.  KOYSTON.  Mr.  Chairman,  I  was  requested  by  Mr.  Seely 
to  come  here  in  his  behalf  as  a  member  of  the  Mississippi  Valley  Com- 
mittee. He  was  unable  to  be  here. 

Galveston  is  a  port  that  was  built  by  the  United  States  Govern- 
ment, created  at  the  behest  of  the  people  of  the  Middle  West  and  the 
Mississippi  Valley.  They  desired  an  additional  port.  The  United 
States  Government  made  the  port  of  Galveston  at  a  cost  of  $7,000,000. 
Xow  the  position  of  Galveston  is  the  same  as  that  set  forth  in  the 
resolution  by  the  Mississippi  Valley  Committee.  We  are  very  much 
interested  in  the  establishment  of  a  merchant  marine,  but  we  are,  as 
I  understand  it,  not  in  favor  of  Government  ownership. 

Now,  there  is  one  idea,  that  strikes  me,  should  be  the  cousre  pursued, 
and  that  is  private  ownership  and  operation,  but  that  can  only  be  ac- 
complished by  the  sale  or  transfer  of  these  vessels.  Some  reference 
has  been  made  to  the  loss  which  will  be  sustained  by  the  Government 
in  making  a  sale,  but  I  do  not  believe  that  the  Shipping  Board  should 
be  charged  with  any  dereliction  of  duty  or  at  all  criticized  in  making 
that  sale,  because  we  must  remember  that  these  vessels  were  not  built 
primarily  for  the  establishment  of  a  merchant  marine,  but  that  that 
was  a  secondary  purpose.  These  boats  were  contracted  for  and  built, 
first,  to  serve  during  the  war.  Now  they  are  not  going  to  be  sold  for 
anything  like  what  it  cost  to  build  them,  and  I  believe  that  our 
attitude  is  that  we  would  like  to  see  the  Shipping  Board  operate  these 
vessels  for  a  while.  We  believe  that  Government  ownership  of  rail- 
roads or  Government  operation  of  railroads,  has  been  a  failure,  and 
we  believe  that  the  operation  of  these  vessels  has  been  largely  handi- 
capped by  Government  operation  of  railroads,  because  we  believe 
that  the  railroads  under  Government  control  have  diverted  com- 
modities from  their  natural  course,  to  the  great  confusion  of  shipping 
matters,  and  laid  an  additional  burden  on  this  board. 

There  was  something  said  about  going  in  and  making  a  merchant 
marine  that  would  be  lasting.  I  think  in  that  connection  it  would 
be  well  to  consider  the  idea  that  when  these  vessels  are  sold  the  Gov- 
ernment should  make  some  regulation,  some  provision  in  the  sale 
whereby  those  vessels  can  not  be  transferred  to  a  foreign  Government 
without  the  permission  of  the  United  States  Government.  There 
passed  under  my  observation  a  transaction  during  the  war  where 
$16,000,000  was  offered  for  nine  Spanish  vessels,  and  they  were  of 
ancient  vintage,  the  majority  of  them.  The  deal  was  about  to  be 
consummated  when  the  Spanish  Government  produced  a  law  which 
forbade  the  transfer  of  Spanish  vessels  without  the  consent  of  the 
Government,  and  took  the  attitude  that  with  that  number  of  vessels 
sold  to  foreigners  it  would  seriously  impair  the  Spanish  marine,  and 
they  declined  to  permit  the  sale.  I  think  if  it  was  good  for  Spain, 
then  it  would  be  a  good  policy  for  this  country. 

I  also  believe  that  when  they  are  considering  a  mercantile  marine 
they  will  also  have  to  bear  in  mind  marine  insurance  com  pa  lies. 
They  are  largely  foreign  controlled.  I  don't  mean  by  that  that  there 
are  no  American  insurance  companies,  but  the  foreign  marine  insur- 
ance companies  can  make  it  very  interesting  for  American-owned 
vessels,  and  there  are  instances  of  their  having  done  so.  But  I  do 
not  believe  that  I  can  add  anything  to  this  discussion.  I  have  en- 
joyed it  very  much.  I  feel  very  lonesome,  because  I  belong  to  a 


136 

profession  that  is  modest  about  discussing  matters  they  know  nothing 
about.  I  am  a  lawyer.  [Laughter.] 

Mr.  HURLEY.  Mr.  Frank  C.  Munson,  representing  the  Munson 
Steamship  Co.,  of  New  York  City. 

Mr.  FRANK  MUNSON.  Mr.  Chairman  and  gentlemen,  I  am  here  as 
a  member  of  the  committee  of  the  American  Steamship's  Association, 
and  I  have  listened  with  great  pleasure  and  great  interest  to  what  has 
been  said  by  the  various  speakers. 

The  question  which  I  think  deserves  the  greatest  consideration  from 
your  Government  officials  is  the  lack  of  •  proper  discrimination  of 
knowledge  to  the  farming  members  of  our  great  country.  The  em- 
phasis laid  on  this  by  the  leaders,  the  heads  of  these  granges  and 
farmers'  associations  proves  conclusively  that  they  do  not  know  Avhat 
is  going  on  in  the  Shipping  Board  and  in  our  Houses  of  Congress  re- 
garding marine  legislation.  And  I  think  that  Mr.  Hurley,  who  has 
been  one  of  the  greatest  publicity  managers  the  Government  has  ever 
seen,  should  see  to  it  that  these  men  are  posted.  [Laughter  and  ap- 
plause.] Mr.  Hurley's  publicity  management,  by  the  way,  means 
much  to  the  merchant  marine  because  the  country  as  a  whole,  those 
people  who  read  the  papers,  know  more  about  the  needs  for  steam- 
ers than  they  have  ever  known  in  our  history  before. 

There  were  two  or  three  matters  which  I  had  in  mind  to  speak  of. 
I  was  a  member  of  the  War  Trade  Board  appointed  by  Mr.  Hurley's 
recommendation  in  September,  1917,  and  that  board  was  composed 
of  a  group  of  men  who  were  each  experts  in  a  different  line  of  business. 
That  group  represented  the  different  Government  departments,  and 
around  the  table  where  they  met  every  day  were  discussed  the  prob- 
lems of  trade.  The  impression  which  was  left  on  me  from  that  serv- 
ice was  a  very  strong  one  for  the  need  of  cooperation  between  Govern- 
ment departments.  That  cooperation  is  a  vital  necessity  if  we  are 
going  to  go  on  and  expand  as  a  country  properly  should.  We  have 
had  some  great  constructive  ideas  put  forward  recently,  one  by  Sec- 
retary Lane  regarding  the  reclaming  of  the  arid  lands  of  the  West 
That  idea  carried  to  fruition,  which  it  probably  will  be,  means  more 
for  our  returned  soldiers,  means  more  for  their  employment,  than  any 
other  single  proposal  that  has  been  brought  to  the  public. 

We  need  constructive  work  here  in  the  Shipping  Board  in  the 
way  of  building  ships,  and  Mr.  Hurley  has  on  his  hands  the  prob- 
lem of  who  shall  have  charge  of  that  constructive  work  under  the 
Emergency  Fleet  Corporation.  I  would  like  to  recommend  that 
some  practical  shipbuilder  be  put  in  that  position  of  Director  Gen- 
eral of  the  Emergency  Fleet  Corporation  for 'this  peace-time  work, 
Such  a  man  could  determine  whether  some  of  the  ships  which  are 
now  being  constructed  had  not  better  be  scrapped,  and  whether 
the  contracts  which  are  in  existence  could  not  be  canceled  with  good 
results  for  the  future  of  the  merchant  marine. 

We  need  as  a  country,  in  order  to  increase  our  merchant  marine, 
the  good  will  of  every  other  country  in  the  world,  and  the  coopera- 
tion between  the  Shipping  Board  and  the  State  Department  tend- 
ing toward  the  realization  of  that  good  will  will  be  productive  of 
good  results.  The  cooperation  exists,  but  I  speak  of  it  because  I 
believe  it  can  be  improved. 

Norway  as  a  country  chartered  to  England  and  to  the  United 
States  about  a  million  and  a  half,  all  of  which  ships  had  the  privi- 


137 

lege  of  trading  in  the  war  zone,  and  Norway  lost  by  submarine 
sinkings  during  the  period  of  the  war  over  1,000,000  tons  of  her 
ships  and  a  large  number  of  her  sailors,  because  she  was  a  friend 
of  the  Allies,  and  desired  to  see  us  win  the  war.  And  Norway  should 
be  treated  with  every  consideration  and  every  justice  regarding  ships 
that  were  taken  over  on  the  ways  when  we  began  to  enter  into  the 
war  in  1917.  Norway  as  a  friend  will  help  us  move  forward  in  the 
expansion  of  our  commerce.  The  neutral  countries  of  the  world 
will  take  our  ships  and  our  goods  in  larger  measures  than  ever  be- 
fore if  we  continue  to  have  the  best  relations  with  them;  and  those 
neutral  countries  of  the  north  which  have  previously  had  German 

foods  and  bought  German  supplies  are  going  to  send  to  the  United 
tates  and  to  England  for  their  supplies,  and  there  is  a  great  mar- 
ket for  the  farmers  and  the  manufacturers  of  this  country  to  look 
forward  to  in  the  future. 

I  thank  you,  gentlemen. 

Mr.  E.  C.  PLUMMER,  of  Bath,  Me.  Mr.  Chairman,  may  I  have  a 
word,  in  view  of  some  of  the  things  that  have  been  said  and  in  order 
that  there  may  be  no  misunderstanding  of  the  Shipping  Board's 
course  after  the  war?  I  want  to  call  the  gentlemen's  attention  to  a 
fact  which  is  not  public,  because  it  is  something  which  is  known  at 
present  only  to  a  few,  those  who  have  made  it  their  business  to  under- 
stand it. 

We  have  in  my  home  city  a  great  company,  the  Texas  Steamship 
Co.,  and  it  is  doing  business,  and  it  is  for  their  interest  to  know 
what  is  going  on  abroad.  I  was  talking  with  one  of  their  officers 
the  other  day,  and  he  told  me  this:  "The  English  builders  all  are 
considering  contracts  to  build  freighters  such  as  we  are  building, 
at  $100  per  ton." 

Now  that  is  for  future  construction.  I  want  to  call  your  attention 
to  the  significance  of  that.  If  we  are  going  to  sell  these  ships,  and 
in  my  opinion  at  least  two-thirds  of  them  should  be  sold  and  would 
be  disposed  of  by  private  corporation,  because  the  other  two-thirds 
are  not  what  we  need  for  the  business — the  time  to  sell  them  is  now, 
while  the  selling  is  good.  That  is  a  fact  which  we  must  remember. 
If  we  hold  on  to  them  too  long,  the  price  is  going  down.  I  have 
held  on  to  one  or  two  things  too  long,  and  I  know  what  it  cost  me. 

Mr.  HURLEY.  We  will  hear  Mr.  J.  P.  Magill,  of  Harris-Magill  & 
Co.,  of  New  York  City. 

Mr.  MAGILL.  Mr.  Chairman  and  gentlemen,  I  am  in  rather  a  pe- 
culiar position.  I  have  been  listening  with  a  great  deal  of  attention 
and  interest  to  what  our  farmer  friends  particularly  have  had  to  say, 
and  although  I  am  in  the  steamship  business,  I  am  also  claiming  kin- 
ship with  these  gentlemen.  I  occupy  a  peculiar  position  in  that 
respect.  In  New  York  State  I  am  an  agriculturist;  in  Pennsylvania 
I  am  a  farmer,  and  some  of  the  interests  with  which  I  am  affiliated 
are  planters  in  Texas.  Now,  the  difference,  as  I  understand  it, 
between  an  agriculturist  and  a  farmer — and  the  planter  is  in  the 
same  category  as  the  farmer — is  that  the  agriculturalist  makes  his 
money  in  the  city  and  blows  it  in  the  country,  the  farmer  makes  his 
money  in  the  country  and  keeps  it  there.  So  in  that  sense  I  am  in 
the  goat  class.  I  simply  mention  this  in  passing,  as  I  want  to  ex- 
plain to  our  friends,  who  are  perhaps  not  so  well  posted  on  the  de- 
velopment of  the  shipping  question  as  some  of  us  who  have  been 


138 

brought  in  closer  contact  with  it,  the  struggle  of  my  own  people 
with  respect  to  this  question. 

When  this  great  war  broke  out  our  people  were  cotton  growers 
and  exporters  in  a  very  large  measure.  The  embargo  placed  on 
cotton  by  this  condition  left  us  with  enormous  committments  and 
nothing  to  forward  them  in.  We  were,  as  they  used  to  say  in  the 
song,  "All  dressed  up  with  no  place  to  go."  And  it  was  a  very 
serious  predicament,  not  only  for  us,  but  for  the  country  at  large,  and 
particularly  for  the  South,  because,  if  you  will  remember,  at  that 
time,  gentlemen,  the  papers  were  flooded  with  requests  "  Buy  a  bale 
of  cotton  and  save  the  South."  They  were  talking  6-cent  cotton, 
like  we  had  back  in  the  early  nineties  down  there  and  everybody  was 
so  blue  that  they  couldn't  see  sunrise.  And  with  very  good  reason, 
because  the  outlook  was  anything  but  flattering.  About  this  time 
our  Secretary  of  State  came  out  in  an  interview  in  which  he  stated 
that  Americans  had  a  perfect  right  to  trade  in  any  of  the  seas,  as 
we  were  a  neutral  people.  Now,  that  information  was  not  given 
under  a  bushel;  it  was  spread  broadcast.  Every  man  in  the  coun- 
try interested,  I  presume,  saw  that  at  some  time  or  other.  The  peo- 
ple with  whom  I  am  associated,  however,  were  the  first  to  act  on 
that.  They  wired  to  Washington  to  ask  if  the  report  in  the  paper 
was  correct,  and  got  an  immediate  reply  confirming  in  toto  the 
principles  as  laid  down  by  our  State  Department. 

On  that  assurance,  and  on  that  bare  assurance,  they  went  into  the 
market  and  chartered  and  bought  everything  that  they  could  get  hold 
of.  They  stretched  themselves  just  about  as  wide  as  they  could  go 
without  breaking  their  skin  and  they  started  to  move  cotton  abroad. 
In  order  to  do  that  they  were  forced  to  buy  and  charter  vessels  wher- 
ever they  could  get  them,  because  if  you  will  remember  at  that  time 
our  overseas  tonnage  was  largely  conspicuous  by  its  absence.  We 
went  down  into  the  eastern  country  here,  and  we  bought  fore-and- 
afters,  and  everybody  up  there  did  the  hootchy-kootchy  because  they 
thought  the  fool-killer  was  dead  when  we  went  up  there  and  paid 
the  prices  we  had  to  pay  for  those  old  fore-and-afters.  Then  they 
said  nobody  but  crazy  people  would  undertake  to  send  those  things 
across  with  any  kind  of  cargo.  We  didn't  stop  to  figure  that  out; 
we  didn't  have  time.  We  brought  them  down  here  and  started  to 
load  cotton  in  them.  Then  they  told  us  that  we  could  not  "  screw  " 
cotton  in  wooden  ships;  it  was  impossible.  We  screwed  it  into 
wooden  ships  and  sent  them  across,  and  they  made  satisfactory  voy- 
ages, most  of  them. 

We  went  out  to  the  Pacific  coast  and  bought  steamers  there.  Some 
of  them  were  good  and  some  of  them  were  not  so  good.  In  our  ex- 
perience we  lost  seven  vessels  through  perils  of  war,  torpedoes,  mines, 
etc.  I  am  thankful  to  the  good  Lord  to  say  we  never  lost  one  through 
a  marine  accident. 

As  an  illustration  for  the  benefit  of  these  gentlemen  particularly, 
because  we  shipping  men  have  been  brought  in  contact  with  it,  and  it 
is  no  news  to  us  when  you  strike  an  instance  of  the  terrific  apprecia- 
tion in  those  properties  as  the  result  of  the  enormous  demand  and 
the  very  limited  supply.  In  January,  1915,  we  had  offered  to  us  for 
sale  a  steamer  on  the  Pacific  coast,  formerly  known  as  the  Algoa. 
My  friend  here  remembers  that  she  dragged  an  anchor  there  in  the 


139 

bay  for  about  seven  years  because  there  was.  nothing  doing.  She 
was  offered  to  us— she  was  about  11,000  tons  berth—for  $300,000,  and 
we  very  promptly  declined  it  because  we  thought  it  was  too  much. 
We  couldn't  see  our  way  out.  Then  in  December,  1916,  we  bought 
that  same  steamer  and  gave  $1,450,000  for  her.  Now,  gentlemen,  we 
are  glad — I  am  glad  to  have  the  opportunity  of  talking  to  some  of 
you  gentlemen,  especially  those  of  you  who  are  open-minded — ^and  I 
know  from  personal  contact  and  observation  that  the  farmer  in  the 
last  analysis  is  open-minded,  and  he  is  the  backbone  and  sinew  of  the 
country  after  all,  and  we  want  him  to  know  just  exactly  what  we  have 
been  up  against  here. 

A  great  many  stories  have  gone  abroad  about  the  enormous  profits 
made  by  these  profiteers  in  the  East,  and  all  that  kind  of  thing.  They 
say :  "  If  ou  buy  a  ship  to-day  and  you  put  a  million-dollar  cargo  in  it. 
There  is  almost  a  million  dollars  profit  on  the  voyage."  They  for- 
get that  we  have  our  banking  friends  to  contend  with ;  we  have  got 
our  insurance  friends  to  contend  with ;  we  have  our  labor  friends  to 
satisfy;  the  coal  merchant  must  get  his  out  of  it;  and  our  humble 
but  persistent  stevedore  is  a  constant  blessing.  It  is  not  all  beer  and 
skittles,  gentlemen,  by  any  manner  of  means.  Notwithstanding  that, 
many  of  us  persevered  and  went  through,  and  when  this  corporation 
was  formed  it  was  a  godsend,  not  only  to  us,  but  to  the  world  at 
large,  because  it  was  the  first  ray  of  hope.  It  was  the  big  way  out, 
and  I  hope  that 'all  of  you  gentlemen  will  get  the  opportunity,  or 
take  the  opportunity,  to  go  over  to  Hog  Island  to-morrow  and  see 
that  wonderful  development  there.  If  that  don't  convince  you,  the 
Lord  help  your  soul;  you  are  past  redemption.  If  that  don't  show 
to  you  that  this  organization  is  a  live  one,  I  don't  know  what  will. 

But  to  get  back  to  the  subject,  now  this  shipping  business,  as  I 
said  before,  is  not  all  beer  and  skittles.  You  don't  put  in  a  nickel 
in  the  slot  and  take  out  a  $2  bill  every  time;  you  are  just  as  liable  to 
put  in  a  $2  bill  and  take  out  a  nickel.  I  know^that  by  experience,  and 
it  cost  me  a  lot  to  find  it  out  and  I  am  not  the  only  one.  The  expense 
of  operation  in  the  steamship  business  is  a  constantly  increasing 
thing,  and  it  is  bound  to  increase.  I  can't  see  where  there  is  going  to 
be  any  material  reduction  in  operating  costs,  which  after  all  is  the 
bulk  of  the  proposition,  because  we  can't  pay  billion-dollar  interest 
with  million-dollar  incomes,  gentlemen.  There  is  no  getting  away 
from  that.  It  seems  like  a  fundamental  proposition  to  me.  Now, 
the  shipping  business  is  just  like  blacksmithing  or  merchandising  or 
any  other  form  of  business.  A  man  goes  into  it  and  invests  his 
money  in  it  because  he  thinks  he  sees  a  chance  to  make  a  reasonable 
profit,  or  a  profit  that  will  bear  a  proper  relation  as  between  his 
investment  in  the  risk  he  assumes  to  make  a  reasonable  return  on  that 
investment.  And  I  know  of  no  business  in  the  world  that  is  as 
highly  technical  and  as  highly  specialized  and  in  which  you  can  as 
readily  lose  everything  you  have  as  in  this  business.  I  am  sure  that 
these  gentlemen  here  who  are  in  the  business  will  vouch  for  that  in 
toto.  Now,  if  that  is  a  fact,  this  question  of  the  distribution  of  this 
fleet  of  ours,  which  cost  us,  we  are  led  to  suppose,  such  an  enormous 
sum  of  money — why,  gentlemen,  it  is  not  such  an  enormous  sum 
of  money.  We  have  gotten  away  from  the  spirit  of  billion  dollars ; 
we  are  thinking  now  in  hemispheres.  We  are  not  thinking  of  locali- 


140 


ties  and  dollars  and  cents ;  we  are  too  big  for  that.     It  is  not  such  a 
big  investment  after  all  when  you  figure  the  enormous  extent  of  this 


A  few  gentlemen  over  here  a  few  years  ago  organized  a  million 
and  a  quarter  corporation,  and  they  didn't  ask  the  Government  or 
anybody  else  for  any  part  of  the  financing.  They  took  it  out  of  their 
own  jeans,  so  that  the  million-dollar  idea  is  absolutely  nothing  terri- 
fying. It  is  only  a  matter  of  relative  values.  If  we  can  get  that  fixed 
in  our  minds  the  rest  of  it  don't  scare  us.  But  to  operate  ships  re- 
quires, first,  of  course,  capital.  You  can  not  operate  them  on  any- 
thing else.  In  order  to  properly  safeguard  that  capital  you,  before 
going  into  any  business,  will  endeavor  to  find  out  what  the  risk  is 
and  what  the  chances  are  of  getting  out  alive  with  it. 

Now  if  the  Government,  as  I  see  it — and  I  am  open-minded  on  the 
question — we  will  play  it  anyway,  we  are  not  seeking  charity ;  we  are 
willing  to  take  our  end  of  the  burden  and  are  prepared  to  take  it, 
but  my  humble  opinion  of  the  proposition  is  that  if  this  fleet  were 
to  be  disposed  of  immediately  it  would  cause  a  very  great  confusion, 
in  that  many  people  have  gone  into  the  shipping  business,  and  their 
policy  to-day  I  find,  in  the  East  at  least,  is  that  where  a  market  looks 
pretty  good  everybody  jumps  into  it.  Somebody  will  come  along 
and  tell  you  that  trans- Atlantic  is  a  good  place  to  berth  a  boat  for. 
About  the  time  you  get  your  lines  fixed  to  berth  a  boat  there,  four  or 
five  other  boats  are  in  there.  Then  somebody  suggests  Antwerp,  Rot- 
terdam, Scandinavia,  and  the  Mediterranean,  and  so  it  goes — they 
jump  from  one  port  into  another. 

Now,  in  order  to  obviate  that  and  to  afford  a  reasonable  means  for 
protection  to  the  investor,  we  have  got  to  get  our  forces  lined  up  so 
that  we  can  systematically  proceed  with  regular  lines  and  regular 
service.  We  must  not  only  run  lines  from  our  own  United  States 
ports  to  the  ports  of  the  world,  but  we  must  take  a  leaf  out  of  the  old 
book  and  hurry  from  Africa  to  Asia,  from  Asia  to  Australia,  from 
Australia  to  the  Pacific,  from  there  to  wherever  the  business  is.  We 
must  get  away  from  the  thought  after  all  that  this  is  a  limited  busi- 
ness. The  fact  remains,  however,  that  in  the  continental  business,  or 
in  the  European  business,  the  bulk  of  the  business  is  carried  by  the 
regular  lines,  the  freight  and  passenger  vessels,  vessels  that  are 
equipped  to  carry  both.  I  don't  believe  there  is  any  shipping  man 
who  has  any  idea  in  the  world  that  in  the  last  analysis  a  tramp  ship 
has  any  more  sho\v  than  a  snoAvball,  berthed  alongside  of  a  steamer 
of  a  well-established  line,  well-organized  and  commanding  low  in- 
surance and  all  of  the  things  that  go  to  a  good  organization.  So  that 
I  believe  we,  in  order  to  get  a  fair  start,  must  have  a  sort  of  a  physi- 
cal division  of  the  business.  Now,  I  am  not  looking  for  any  monopo- 
lies at  all,  because  I  am  convinced  absolutely  that  monopoly  and 
water-born  transportation  are  in  no  way  related.  I  don't  see  how 
it  is  possible.  It  never  has  been  done — at  least  successfully.  But  we 
must  have  a  controlling  hand,  or  mind,  that  will  keep  us  out  of  these 
rough  waters,  so  that  we  won't  be  cutting  one  another's  throats  while 
the  other  fellow,  who  is  well  organized  and  is  controlled  by  several 
compact,  big  organizations  in  Europe,  while  he  stands  back  with 


141 

an  expression  on  his  face  that  I  can  only  liken  to  the  old  caricature 
of  the  smile  on  the  face  of  the  tiger  that  you  are  familiar  with  in 
years  gone  by — he  will  just  eat  us  up.  This  is  not  child's  play;  it  is 
not  a  business  that  any  man  or  men  can  go  into  without  knowing 
definitely  every  detail  of  that  business,  unless  they  want  to  lose 
everything  they  have  on  earth,  including  their  reputations  as  busi- 
ness men. 

In  view  of  this  fact  I  believe  that  the  control  of  the  vessels  might 
better  be  chartered,  if  you  please,  to  approved  American  operators  on, 
say,  bare  boat  form,  with  whatever  modifications  necessary  to  prop- 
erly safeguard  the  Government's  interest.  Let  the  ultimate  dispo- 
sition of  these  vessels  rest  with  the  future  and  with  what  development 
those  handling  them  are  able  to  show.  We  don't  need  to  be  distressed 
about  what  is  going  to  happen  to  these  things  10  years  from  now. 
We  may  all  be  dead  then,  and  somebody  else  will  have  the  problem 
to  work  out.  But  let  us  take  it  reasonably  and  decently,  a  day  at 
a  time,  but  let  us  get  started  with  as  little  opportunity  to  be  trimmed 
by  the  other  fellow  as  we  possibly  can.  I  believe  firmly  that  if  rea- 
sonable supervision,  not  in  the  shape  of  rates — neither  maximum  nor 
minimum  rates,  gentlemen,  are  practical;  it  is  unthinkable  in  this 
business.  Any  shipping  man,  any  man  that  is  familiar  with  the 
problem:  any  of  these  traffic  men  who  are  handling  these  proposi- 
tions— I  mean  traffic  men  for  industrial  corporations  who  have 
studied  these  things — will  agree  with  me  that  maximum  rates  are 
impossible,  because  you  may  have  a  line  of  steamers  running  from 
A  to  B,  and  from  B  to  D;  A  to  B  may  be  doing  right  well;  the 
other  line  ma}7  be  losing  right  along.  Now  suppose  somebody  comes 
along  and  says:  "  Well,  the  rates  between  the  first  two  points  are  too 
high."  Well,  you  can  sit  down  and  argue  until  you  are  black  in  the 
face,  but  the  evidence  is  all  against  you ;  you  are  making  a  profit  that 
may  be  excessive.  They  cut  those  rates  and  you  hold  the  bag  on  the 
other  end  of  it.  You  can't  regulate  these  rates,  gentlemen.  They 
have  got  to  regulate  themselves.  And  they  will.  For  these  reasons, 
I  am  in  favor — at  least  my  present  opinion  is — as  I  said  before  I 
am  open-minded  and  not  bigoted  on  the  question,  my  present  opinion 
is  that  we  can  better  get  this  matter  established  if  the  Government 
retains  its  interest,  because  the  very  fact  of  itself  is  a  warning  to  our 
foreign  friends  that  they  are  not  bucking  you  and  me.  There  are 
plenty  of  those  big  organizations  on  the  other  side — not  plenty  of 
them,  but  probably  five  that  control  the  business,  but  who  are  enor- 
mously capitalized  and  would  not  hesitate,  it  has  always  been  their 
policy  and  is  recognized  as  ethical  to  use  whatever  means  are  avail- 
able, I  mean  in  fairness — through  rebates  or  whatever  other  methods 
they  may  deem  right — to  get  the  price  that  they  are  entitled  to.  But 
if  they  know  that  they  are  bucking  the  United  States  Government, 
they  know  that  it  is  a  pretty  long  purse  to  pull  against.  Now,  I 
think  its  moral  effect,  if  nothing  else,  would  have  a  beneficient  effect, 
and  for  that  reason  I  am  in  favor,  for  the  moment  at  least,  of  the 
Government  retaining  these  vessels  under  some  such  idea  as  I  have 
suggested,  bare-boat  form;  that  you  will  eliminate  very  largely  the 
extravagance  in  management  and  operation  of  the  vessels  by  the 
Government.  Any  man  who  has  handled  these  Government  vessels 
after  handling  his  own  vessels  will  tell  you  with  all  candor  and 


142 

honesty  that  they  are  very  wasteful.  If  you  take  these  boats  on  bare 
boat;  that  is,  we  furnish  crews  and  everything  else,  the  Government 
simply  turns  the  boat  over  to  us,  for  which  we  pay  them  a  reasonable 
amount,  safeguarding  their  interests,  if  you  please,  as  well  as  our 
own,  and  giving  us  a  chance  to  spread  with  the  moral  support  of  the 
United  States  Government  back  of  us,  I  think  we  have  a  pretty  good 
start,  and  without  that  I  am  from  Missouri.  I  ana  not  closed  on  it, 
but  I  would  like  to  be  shown. 

Mr.  HURLEY.  Before  we  adjourn,  gentlemen,  I  would  like  to  hear 
from  Mr.  John  L.  Hamilton,  American  Bankers'  Association,  of  Co- 
lumbus, Ohio,  for  a  few  minutes.  Then  we  will  adjourn  after  that, 
unless  there  is  some  other  gentleman  who  would  like  to  talk. 

Mr.  HAMILTON.  Mr.  Chairman,  I  don't  want  to  take  much  of  your 
time,  but  I  have  listened  with  a  great  deal  of  interest  to  the  discus- 
sions that  have  taken  place  in  this  meeting.    It  seems  to  me  that  we 
are  not  very  far  apart.     There  seems  to  be  a  general  opinion  that 
these  ships  should  be  privately  owned.    There  is  a  general  opinion 
that  there  should  be  some  form  of  Federal  control.     I  agree  with 
both  of  these  propositions.    I  think  we  have  in  this  board  here  the 
foundation  for  an  organization  that  can  meet  this  situation.     We 
have,  as  you  know,  the  Federal  Reserve  Banking  System  which  has 
proven  to  be  a  success.    The  Federal  reserve  banking  organization  is 
nothing  more  or  less  than  a  privately  owned  enterprise  operating 
under  Federal  control.    We  have  in  addition  to  that  an  organization 
for  the  development  of  the  agricultural  interests  of  the  United  States, 
namely,  the  farm  land  bank.    That  is  nothing  more  or  less  than  an 
organization  privately  owned  and  its  aim  is  to  assist  the  farmers 
in  developing  the  agricultural  interests  of  the  United  States.     We 
have  here  brought  together  all  the  different  interests  of  the  United 
States:  Agriculture,  manufacturing,  mining,   labor,  financial,   and 
shiping  interests.    We  must  get  together  on  some  form  of  an  organiza- 
tion which  will  protect  the  interests  of  each  of  this  element.    If  you 
disturb  one  of  these  elements  you  disturb  the  whole  business  element 
of  the  United  States.    It  makes  no  difference  which  end  of  the  prop- 
osition you  take  hold  of.    Now  I  will  suggest,  not  a  definite  plan,  but 
a  plan  drawn  out  of  the  meeting  here  to-day,  that  all  shipping  in- 
terests be  chartered  under  a  Federal  statute ;  that  this  Shipping  Board 
be  the  Federal  reserve  board  for  such  an  organization  and  direct  its 
management,  direct  the  management  of  its  institution.     I  recom- 
mend still  further  that  the  United  States  be  divided  into  12  zones, 
contiguous  with  the  12  zones  of  the  Federal  reserve  bank,  for  the 
reason  that  this  whole  proposition  will  fail  unless  you  have  back  of 
it  some  means  of  extending  credit  to  the  would-be  purchasers  of 
American  products,  and  the  best  way  to  obtain  that  credit  is  for  the 
interests  of  the   Federal   reserve  districts  through   their  banking 
facilities  be  able  to  extend  a  credit  to  the  purchasers  of  American 
products.     I  believe  a  plan  of  that  kind  can  be  worked  out.     I  be- 
lieve the  different  interests  can  be  represented  in  such  an  organiza- 
tion and  I  believe  that  the  Shipping  Board  should  be  the  controlling 
factor  in  that  organization  the  same  as  the  Federal  Reserve  Board 
is  the  controlling  factor  in  the  banking  organization.     [Applause.] 
Mr.  TAYLOR.  May  I  ask  a  question  before  closing?     Mr.  Smull 
brought  up  the  question  of  the  right  of  recoveries  as  against  the 


143 

United  States  Government  as  the  Shipping  Board  Fleet.  Is  that 
correct  ?  Are  not  the  titles  of  those  vessels  vested  in  the  corporation  ? 

Mr.  HURLEY.  The  Emergency  Fleet  Corporation  has  the  full 
authority  to  control  that. 

In  behalf  of  the  Shipping  Board  I  desire  to  thank  you  gentlemen 
for  coming  here,  and  the  meeting  stands  adjourned. 

Mr.  MUNSON-.  I  just  want  to  say  a  word  of  appreciation.  Every 
one  of  us  has  welcomed  the  soldier  home  from  Europe  but  most  of  us 
don't  realize  the  degree  of  criticism  and  lack  of  appreciation  that 
has  been  the  lot  of  the  members  of  the  Shipping  Board.  I  wanted 
to  say  a  word  if  I  may  about  Mr.  Hurley's  unselfish  devotion  and 
about  Mr.  Steven's  work  and  the  other  members  of  the  board  work- 
ing early  and  late  in  their  country's  interest  in  the  building  of  our 
merchant  marine.  I  want  to  propose  a  vote  of  appreciation  for  what 
they  have  done  to  win  the  war  and  to  move  that  we  rise  in  voting 
our  appreciation  and  thanks  for  what  they  have  done. 

(All  those  present  rose.) 

Mr.  MARSH.  May  I  ask  you  two  questions  for  information?  I 
think  two  points  were  not  brought  out  here.  Mr.  Charles  M.  Schwab 
said  ,  "Ships  can't  be  built  without  money  in  war  times.  It  takes  a 
great  deal  of  money.  Undoubtedly,  after  the  war  is  over  the  ships 
we  are  paying  for  now  will  pay  for  themselves  many  times  over." 

Now,  did  Mr.  Schwab  mean  that  those  ships  could  be  made  to  do 
this  under  Government  ownership,  do  you  think? 

Mr.  HURLEY.  I  don't  know. 

Mr.  MARSH.  May  I  ask  you  the  second  question  ?  I  have  read  with 
great  care  your  pamphlet  on  the  world's  shipping  facilities.  In  your 
judgment,  in  view  of  the  enormous  amount  of  tonnage  now  con- 
structed, what  proportion  of  the  contemplated  shipbuilding  program 
is  essential  in  the  next  five  years  ? 

Mr.  HURLEY.  I  couldn't  give  you  an  answer  offhand.  I  don't  re- 
member all  those  figures. 

Mr.  MARSH.  Will  you  put  that  in  the  records  that  we  might 
have  it? 

Mr.  HURLEY.  Certainly,  I  will  be  delighted  to  do  so. 

The  following  telegram  from  Frank  M.  Myers,  secretary,  Farmers 
Grain  Dealers  Association  of  Iowa,  was  requested  to  be  incorporated 
in  the  records : 

Farmers  of  Iowa  are  of  opinion  that  granting  of  subsidies  to  promote  merchant 
marine  would  be  inadvisable  and  impractical.  A  merchant  marine  would  handle 
cargoes  both  from  and  to  the  United  States  and  deal  with  countries  exporting 
agricultural  products.  Large  imports  of  agricultural  products  into  United  States 
woud  be  an  immense  handicap  to  American  agriculture. 

FARMEKS  GRAIN  DEALERS  ASSOCIATION  OF  IOWA, 
FRANK  M.  MEYERS,  Secretary. 

Meeting  adjourned  at  5.10  o'clock  p.  m. 


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